A330neo order conversions continue as we wonder what is going on in China

Victoria
By Victoria July 23, 2014 11:58

A330neo order conversions continue as we wonder what is going on in China

Airbus is not holding back on its drive to convert A350-800 orders to the A330neo types.

Today we have Hawaiian Airlines converting its order for six A350-800s to the A330-800neo. For the A350-800 –  AWAS has two on order; Yemen Airways has ten and Aeroflot and Asiana have eight apiece on-order yet to convert. One question already being asked, is why AWAS has not reacted to convert its A350-800s to the A330neo at speed: as a lessor you would have thought that it would have been one of the very first in line for the A330neo.

Although of course AWAS has to concern itself with getting the correct price and the correct delivery slot timing and that may well require a little more time for others to convert and for some negotiation to take place. But there is word from Aeroflot that they may well stick it out for their A350-800 deliveries and in so doing drive a very hard bargain out of Airbus as the manufacturer seeks to delete A350-800 orders completely.

Thus far it is safe to say the A330neo is doing its intended job very well indeed.

Meanwhile the Chinese civil aviation authority has requested that airlines reduce flights by 25% in Eastern China. Chinese airspace is grinding to a halt. Around 200 flights were cancelled at Shanghai’s Pudong and Hongqiao airports with another 120 flights delayed for more than two hours. Flights departing from Nanjing and Hangzhou were also affected. Chinese news agencies report that passengers should expect 26 days of severe delays at the 12 main airports.

The reason for the cancellations and delays has not been made public by Chinese authorities but, as they stated that this will continue for many weeks, most are of the opinion that the airspace is quite literally overcrowded. As such, how can China hope to have infrastructure keep pace with aircraft deliveries over the next decade? The simple fact is that they will not be able to, especially now that the market has been partially deregulated for low-cost start-ups.

With this in mind Chinese airlines and those looking to start-up an airline in the country need to think long and hard about their business plans and if they can cope with significant daily delays and possible significant loss of demand, as high speed trains (which are hardly ever delayed) form serious competition to aviation. There are also a growing number of air traffic restrictions in place across China this week, although only a few are linked to the sealing-off of Gansu province after a death from bubonic plague this week, which can be treated with relative ease here in the 21st Century through antibiotics.

Maybe Chinese authorities will demand that airlines up-scale to larger aircraft and drop frequencies at the same time if things continue to get worse. This is a distinct possibility and indeed the process has merit for an airline trying to balance the books.

But as China has its own problems with demands for aerospace related infrastructure it has to be agreed that they are doing a very good job in Eastern Africa, where projects are near completion or underway that will cope with future demand for many years. Now the same is happening in South America where China has taken the chance to invest in Argentina and Venezuela as both countries have been cut off from global markets of late.

In Venezuela, $4bn loans will be repaid with oil while Argentina is trying to finalise an $11bn deal that will prevent a default this month. Both deals mirror in many ways the mineral deals between East African nations and China which has in turn seen air traffic leap between China and East Africa – will the same now start to happen for Latin America? It seems highly likely.

Victoria
By Victoria July 23, 2014 11:58
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