China Southern affected by ‘one airline, one route’ policy

Victoria
By Victoria February 12, 2013 10:39

China Southern affected by ‘one airline, one route’ policy

China operates its long-haul network under a de facto one airline, one route policy that generally limits city-pairs to one operator: Air China is the only Chinese carrier between Beijing and New York; China Eastern the only one between Shanghai and Los Angeles and China Southern the only one between Guangzhou and Paris. There are exceptions, notably for Air China. Although the so-called “Big Three” – Air China, China Eastern and China Southern – are all state-owned, Air China is the flagship, and being based in Beijing and with its former chairman Li Jiaxiang the chairman of aviation regulator CAAC, Air China enjoys certain privileges.
Air China operates alongside China Eastern from Shanghai to Frankfurt, Paris and Sydney. China Eastern, however, is not permitted to operate alongside Air China from Beijing. Additionally, Hainan Airlines is permitted to operate alongside Air China between Beijing and Moscow (Air China has a daily flight, Hainan thrice-weekly while Aeroflot is double daily and has services to Guangzhou and Shanghai). Air China is the largest international operator at Beijing Capital.
As China Southern nears 18 months since taking delivery of its first A380, the carrier has yet to receive authority to operate its full fleet on viable services, creating a quiet debacle for Chinese aviation. Losses from the mere three A380s China Southern had in 1H2012 amounted to a figure the carrier would quantify only as less than RMB100 million (USD16 million).
Full year 2012 losses for the A380 fleet, now at four aircraft, are reported to be between RMB150-200 million (USD24-32 million). The high sums come despite Chinese carriers being traditionally stronger in the second half as well as China Southern launching the A380 between Guangzhou and Los Angeles in Oct-2012.
Plans announced in Aug-2012 for China Southern to cooperate with Air China by deploying the A380 between Beijing and Paris were dragged out by Air China and China Southern working through the details and finally the SkyTeam alliance, of which China Southern is a member, reportedly raising concerns about the cooperation. Although the concerns are unspecified, China Southern operates a joint venture with SkyTeam members Air France and KLM, suggesting the A380 operation would be conducted outside of that venture. As China Southern prepares to take its fifth and final A380 – adding further financial burdens – the carrier is being tested between profitability, national allegiance and international cooperation.

Victoria
By Victoria February 12, 2013 10:39
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