China Eastern Airlines and Shanghai Airlines became one. They no longer fight each other for passengers. So now they can turn around and attack Air China which is trying to squeeze into the Shanghai market.
In February, Air China, the national carrier, quietly promoted its Shanghai office to a full-fledged branch. Probably it saw the writing on the wall. Possibly it was planning to move at least a part of its international flights to Shanghai from Beijing.
A news report yesterday said Air China had started the process of eventually shifting 80% of its international flights to the Shanghai hub to take advantage of the expected increase in overseas visitors to the World Expo next May.
China Eastern, the Shanghai-based carrier which now has Shanghai Airlines on side earlier this month, announced that it had upgraded its office in Beijng to a branch that would operate its own aircraft fleet and maintain its own flight teams.
As many as four Airbus A330s would be under the control of the Beijing Branch, and the fleet size would expand to nine by the end of this year. None of which would have made Air China very happy.
Snapping back, Liu Shaoyong, chairman of China Eastern, said the carrier would raise its Beijing market share from the current 13% to 20% within five years.
Snapping back, Liu Shaoyong, chairman of China Eastern, said the carrier would raise its Beijing market share from the current 13% to 20% within five years.
Rao Xinyu, board secretary with Air China, almost in response, said Air China would maintain its Shanghai strategy despite the ongoing merger between China Eastern and Shanghai Airlines. Air China commands 12% of the Shanghai market share. It wants more. Lots more.
Ji Lijun, an analyst with Shanghai Securities, said, "Beijing is a traditional city servicing international flights, while Shanghai is an important hub for flights in China, Japan and Southeast Asian countries. All carriers know the two cities’ significance." It would be an ignorant carrier that did not.
Si Xianmin, president of the Guangzhou-based China Southern Airlines, said the new China Eastern would definitely shake China Southern’s footing in Shanghai, but may be less influential in other areas.
One commentator said the current competition involves not only the top three State-owned carriers, but foreign carriers as well. In addition, budget carrier Spring Airlines has cultivated a large group of loyal clients through low-cost flights.
He added, "If we factor in the rivalry of high-speed railways, the competition is even more complicated".
China Daily reported that Zou Jianjun, a professor with Civil Aviation Management Institute of China, said the newly-merged China Eastern should be wary of its home base.
"Although China Eastern and Shanghai Airlines together hold more than 50% of Shanghai’s market, they may not hold the percentage after the merger.
This is because the previous market share was achieved through fierce competition. In addition, after the merger, they may shift part of their capacity to other cities. All these factors may turn negative."
Makes for an excellent dog fight to watch. If you are not an airline.