[photopress:air_China_air.jpg,full,alignright]Beijing-based Air China, which raised $1.1 billion in a dual listing in Hong Kong and London in December, 2004, now has a market capitalization of $37.4 billion, higher than that of British Airways, Southwest Airlines and Singapore Airlines combined.
Air China had just a minimal presence in Shanghai which is China’s busiest airport in terms of capacity and will probably overtake Hong Kong as the biggest aviation hub in Asia within the next decade.
Now Air China will buy up to 30% of China Eastern. Not a great catch. The poorly managed, Shanghai-based airline hasn’t made a profit since 2003 and has been near bankruptcy.
Where Air China will hit a major problem is on international flights – especially to and from the United States. Passengers judge airlines by their inflight service and Chinese airlines, internationally, are simply not in the race.
Passengers chose their service of nationality, language, quality of service and sometimes on price. The major Chinese airlines fail on all of these.
Air China may well have won an interesting battle. But it is far from winning the war.
Source: Business Week
