China Eastern ready to look at LCC operations

Victoria
By Victoria March 7, 2013 12:15

China Eastern ready to look at LCC operations

China Eastern Airlines has made it clear that it will look to establish a low-cost carrier on the Chinese mainland if the JetStar Hong Kong joint venture with Qantas goes well. In effect JetStar Hong Kong is a testbed for a Chinese low-cost carrier (LCC). This will without doubt lead China Eastern to the door of the aircraft lessors unless they are willing to wait it out for aircraft to be delivered new.
China Eastern stated today that it may cooperate with Qantas on the new budget airline for the Chinese mainland. If this were to be the case then the JetStar brand could simply be rolled out across China.

In Europe and the USA the average market share of low-cost airlines is over the 30% mark and growing while in China there remains just Shanghai-based Spring Airlines as the only budget carrier with about 5% market share.
So why is the Chinese market, which is perfectly suited to low cost travel proliferation, not already seeing massive LCC growth? The truth lies in the fact that domestic aviation fuel rates, taxation and salary requirements would all have to be relaxed by central government in order to facilitate an LCC boom. It will come; China Eastern obviously thinks it is not far away. But given that the playing field is already level within China between the operations of the big airlines, it is a wonder that they would wish to reduce prices and form an LCC, unless of course they were readying for future de-regulation of the Chinese market – now that would be a big leap and it would take a significant slowing of the Chinese economy, if not full reversal, for it to be considered in Beijing any time soon.

Victoria
By Victoria March 7, 2013 12:15
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