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Weaker outbound travel
impacts category growth
Several factors impacted both international and domestic air travel, slowing the growth rate of the airlines category, which declined 3 percent in value compared with a 39 percent rise in value a year ago.
A weaker yuan and the threat of international terrorism impacted outbound passenger traffic. After more than a decade of double-digit growth, outbound tourism grew only 4.3 percent in 2016, according to the China National Tourism Administration (CNTA). In addition, weaker global economic conditions dented the cargo business.
During the same period, inbound tourism increased 3.8 percent, about even with the prior year. The opening of Disneyland in Shanghai helped drive inbound passenger travel and lower fuel prices helped profitability. But the expansion of domestic high speed rail service added competition, and the growth of low cost airlines intensified price pressure.
The BrandZÔ Top 100 Most Valuable Chinese Brands 2017 lists four airlines, including the three State Owned Enterprises (SOEs) that together have significant market share: Air China, China Eastern Airlines, and China Southern Airlines. The other brand –
Hainan Airlines – is privately owned. Only Hainan Airlines increased in value.
Two airlines – Air China, and China Eastern Airlines – derived over a third of total revenue from overseas business, placing them among the BrandZÔ Top 10 Chinese brands in international sales as a proportion of their business.
Air China added 25 aircraft, developed Chengdu as a regional hub, introduced a flight to Sydney, and added international routes in Shenzhen to meet demand for travel to southern China. The airline operates 377 passenger routes to 173 cities in 39 countries. Through its Star Alliance partners, Air China reaches 1,330 destinations in 193 countries.
China Eastern Airlines inaugurated flights between Shanghai and Chicago. The airline covered 1,057 destinations in 179 countries through its SkyTeam network, as of December 2015. Passenger volume increased by 14.6 percent in 2015, but cargo and mail improved only 1.3 percent. The airline operates mostly from Shanghai but also uses Xi’an and Kunming as hub cities.
Hainan Airlines operates around 500 routes to 100 domestic and international destinations. It enjoys a strategic partnership with Caissa Travel Group. A sister organization with the same corporate parent. Caissa is a travel agency devoted to offering upscale and personalized travel for members of China’s expanding middle class who desire more than the usual tour experience.