Customer demand changes in the PRC, and how the airlines respond Xianping Wang 盖安德 ( 北京 ) 公司 December 7, 2010, Istanbul
Introduction China has quickly become a major air market, and its airlines have to deal with millions of additional passengers each year Fast traffic growth created great opportunities to airlines and airports, but also impaired the improvement of service quality In recent years, market segmentation has been one of the leading factors that trigger both regulatory and airline management philosophy changes, but meet the basic need, rather than deliver happiness, is still the primary focus of the industry Facing customer demand changes, especially the new needs of the mobile generation and digital travelers, PRC airlines reactions differ from one to the other, which may well determine the future of each In the foreseeable future, traffic/capacity growth will continue overwhelming most of the PRC airline managers Challenges from high-speed rail will force airlines focus more on products and service qualities based on technology and innovation
China experienced quick and consistent traffic growth in the past decade PRC passenger throughput growth (2000-2009, in millions) 600 500 400 300 242 284 332 388 406 486 CAGR 15.4% 200 134 149 171 174 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source:CAAC
Due partially to the quick growth, passenger demands in China has primarily been a supply (capacity), rather than a quality (service), issue Airline/Airport managements have been overwhelmed by traffic growth, and their energy and resources on service improvement have virtually been hijacked
Higher load factor in recent years further deprived investments of resources for improvement Certain Historic Performance Data of PRC Airlines Traffic growth rate Industry Average L/F Source:Ping An Insurance
Quickly become big in size, the PRC airlines face greater pressure to become better World s Network Carrier Passenger Traffic 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 1 2 3 4 5 6 7 8 9 10 Source:IATA 2010-6
The PRC airlines did not have such luck therefore, service has not been a strong tradition for the PRC airlines, nor has the infrastructure been well developed
After a few rounds of consolidation, the PRC network carriers are ready to play major roles in domestic and international competitions Comparison among the Big Three on passenger, fleet, weekly departure and points of service (Million) Source: Operation Report System, China Eastern Source: OAG Schedules, Jul 1 st -7 th 2010 Source: Operation Report System, China Eastern Source: OAG Schedules, Jul 1 st -7 th 2010 8
While dealing with pressures from traffic growth, PRC airlines start to be sensitive to customer demands, as well as the demand changes In recent years, business traffic segment grew faster about 50% of domestic flyers are fore non-personal purposes in 2009, according to the CAAC. Demands to Satisfaction and Happiness outpaced mere need While income per capita grew and wealth accumulates, market segmentation becomes more obvious China is no longer a purely price-sensitive market The international expansion by the Big Three, associated with the alliance membership of each, presses the management further in developing products and improve services
Network development has been the primary focus to meet the changing demand, which also plays a significant role in improving services 作为产品体系发展的主要平台, 新东航已经具备基本的网络结构形态 合理的质量指标和明确的发展时间计划 南航网络结构中的国内枢纽网络部分中国南方航空航线网络计划 : 第十年 (2016 年 ) 总览 25 CHINA SOUTHERN 25 KHG 2014 年的新东航波峰结构 : 良好的完整性 互动性和稳定性 YIW KCA AKU HTN TCG KRL URC AAT LXA HMI DNH 喀什 阿克苏 XIL HLD 10 NDG HEK 乌鲁木齐 CGQ JIL TGO 0 SHE JMU HRB MDG 敦煌 JNZ 和田 DDG HET BAV PEK JGN DLC TSN SHP INC YNT TYN SJW WEH WEF TNA TAO XNN ENY LHW LYI LYG LYA CGO XUZ XIY YNZ JZH NNY FUG HZG NKG HFE CZXNTG XFN WUX SHA MIG 拉萨 WUH HGH CTU NAO WXN YIH AQG HSN TXN NGB ENH YIW CKG YBP LZO DYG CGD JDG JUZ HYN WNZ CSX KHN XIC TEN WUS LJG ZAT KWE FOC PZI YON TPE DLU AVA KOW JJN KMG KWL MXN XMN LZH SWA CAN SZX NNG ZUH 达卡 HKG BHY MFM ZHA 伊宁 库车 塔城 Kor l a 20 15 5 乌鲁木齐 4:30 5:30 6:30 7:30 YNJ 8:30 9:30 昌都 嘉峪关 西宁 兰州 银川 包头 西安西安 万县沙市成都恩施九江常德重庆张家界长沙南昌数年内宜宾, 新东航有条件西昌泸州 迪庆丽江攀枝花昭通贵阳保山的核心枢纽大理芒市昆明 仰光, 曼德勒 10:30 西双版纳 11:30 思茅 万象 12:30 DEP 九寨沟 曼谷 13:30 新加坡 14:30 绵阳 南充 15:30 ARR 运城 16:30 达县 吉隆坡, 槟榔屿, Johorbahru 安康 17:30 榆林 柳州 南宁 北海 18:30 呼和浩特 三亚 太原 宜昌 桂林 19:30 襄樊 洛阳 湛江 长治 南阳 海口 锡林浩特 20:30 郑州 广州 北京 石家庄 武汉 拥有运行指标世界一流 珠海 21:30 深圳 天津 济南 阜阳 合肥 香港 海拉尔 赤峰 22:30 安庆 23:30 秦皇岛 潍坊 临沂 徐州 景德镇 梅县 朝阳锦州 南京 黄山 汕头 烟台 武夷山 青岛 连云港 常州 首尔金边, 暹粒大阪曼谷 厦门 齐齐哈尔 长春长春 沈阳 大连 盐城 无锡 威海 义乌 泉州 河内, 胡志明市 南通 杭州 福州 丹东 上海 温州 新加坡 宁波 哈尔滨哈尔滨 舟山 黄岩台州 吉林 吉隆坡 佳木斯 牡丹江 延吉 首尔, 釜山, 大邱首尔, 釜山, 大邱, 清州 大阪, 福冈, 札幌大阪, 福冈 首尔, 釜山 大阪, 福冈 马尼拉, 宿雾 HAK SYX 40 42 GARFINKLE & WANG ASSOCIATES, LLC
Domestic networks provide strong bases for PRC airlines to expand internationally to meet the high demand of PRC citizen traveling abroad Nonstop International Passenger Flights of PRC Airlines in 2010 Stockholm St. Petersburg Moscow Yekaterinburg Novosibirsk Krasnojarsk Irkutsk Seattle Vancouver New York JFK San Francisco Los Angeles London LHR Berlin Amsterdam Chita Brussels Frankfurt Paris Munich Budapest Milan Madrid Rome Destinations Airline 2000 2010 Air China 24 44 China Eastern* 16 57 China Southern 15 53 Hainan Airlines - 15 Shenzhen Airlines - 8 Cathay Pacific* 42 52 Baku Ashgabat Teheran Dubai Khudzhand Dushanbe Karachi Bishkek Osh Islamabad Almaty Bole Delhi Bangalore Male Kathmandu Urumqi Dhaka Kolkata Air China Service China Eastern Airlines Service China Southern Airlines Service Hainan Airlines Service Shenzhen Airlines Service Lhasa Mandalay Yangon Phuket Jinghong Vientiane Guangzhou Nanning Hanoi Sanya Haikou Da Nang Shenzhen Manzhouli Hailar Changchun Shenyang Tangshan Dalian Harbin Kalibo Cebu Mudanjiang Jiamusi Yanji Pyongyang Khabarovsk Vladivostok Sapporo Tianjin Seoul ICN Yangyang Niigata Sendai Taiyuan Toyama Seoul GMP Cheongju Komatsu Fukushima Daegu Zhengzhou Qingdao Muan Okayama Nagoya Tokyo NRT Hiroshima Busan Tokyo HND Fukuoka Osaka Shizuoka Xi an Ib araki Jeju Matsuyama Chengdu Wuhan Hefei Wu xi Nag asaki Nan kin g Shanghai PVG Chongqing Kagoshima Shanghai SHA Nanchang Hangzhou Ningbo Changsha Guiyang Bangkok Penang Kuala Lumpur Kunming Ulaanbaatar Surat Thani Singapore Siem Reap Phnom Penh Jakarta Ho Chi Minh Beijing Denpasar Xiamen Fuzhou Taipei TPE Okinawa Taipei TSA Manila Saipan Sydney Melbourne Source: GCW China Aviation Database 11
High-yield customer products are becoming the focus by global network carriers, and the PRC airlines are awaking, too
To meet the demands by the digital travelers, the PRC network carriers invest heavily in related IT capabilities
Airlines and airports in China join hands in serving the digital generation of travelers, too
LCCs start to play a meaningful role in meeting the changing demands 黑河 哈尔滨 Spring Airlines: the only LCC in China and the only one relays heavily on ancillary revenues 长春 沈阳 呼和浩特 天津 大连 银川 石家庄 烟台 兰州 青岛 至日本茨城 西安 成都 绵阳 虹桥杭州 浦东 重庆 常德长沙 南昌 温州 芷江 福州 昆明 贵阳 桂林 泉州厦门 南宁 广州珠海 深圳香港 汕头 Data Source: Spring Airlines 海口 三亚
Juneyao Airlines: a typical example of soul-searching in dealing with the challenge of market segmentation 哈尔滨 乌鲁木齐 长春 沈阳 包头 呼和浩特 天津 石家庄 长治 青岛 西安 成都 宜昌 武汉 上海 浦东 重庆 长沙 南昌 温州 昆明 桂林 连城 福州厦门 南宁 北海 珠海 深圳 三亚
Despite higher growth rates, LLCs role is still very limited in China Passenger Traffic of Spring Airlines Passenger Traffic of Juneyao Airlines 5000 4500 thousands 4,313 5000 4500 thousands 4000 4000 3500 3000 2500 2000 1500 1000 500 0 2,944 2,353 1,137 181 2005 2006 2007 2008 2009 X23.8 3500 3000 2500 2000 1500 1000 500 0 2,448 1,420 969 66 2005 2006 2007 2008 2009 X37.1 Sources: GCW China Aviation Database
A la carte services? Hainan Air s hybrid model
Quick traffic growth fueled the airline rush. Further consolidation is equally urgent as improving service quality Existing AOCs in the PRC as of October 2010 Shenyang Beijing Tianjin Shijiazhuang Jinan Xi an Zhengzhou Nanjing Shanghai Chengdu Wuhan Hangzhou Ningbo Chongqing Legend Passenger & cargo All-cargo Kunming Guiyang Guangzhou Shenzhen Hongkong Xiamen Regional Sources: GCW China Aviation Database Haikou
To meet further demands of growth, most PRC airports need infrastructure expansion and new finance sources Airports with PAX traffic(2009): over 10 million Kashi Hotan Aksu Yining Kuche Chengdu Chongqing Kunming Tacheng Korla Urumqi Lhasa 5-10 million 1-5 million Under 1 million Dunhuang Changdu Mangshi Baoshan Jiayuguan Diqing Xining Lanzhou Xichang Lijiang Dali Simao Jiuzhaigou Mianyang Nanchong Yibin Zhaotong Panzhihua Jinghong Yinchuan Daxian Hohhot Baton Yulin Hanzhong Ankang Wanxian Luzhou Enshi Chongqing Guiyang Liuzhou Nanning Beihai Yichang Taiyuan Nanyang Xiangfan Xilinhot Shijiazhuang Guilin Luoyang Changzhi Shashi Zhangjiajie Changde Zhanjiang Wuhan Chang sha Hailar Chifeng Chaoyang Jinzhou Fuyang Anqing Qinhuangdao Zhengzhou Ganzhou Zhuhai Jinan Tianjin Yantai Weifang Linyi Lianyungang Xuzhou Yancheng Nanjing Hefei Changzhou Huangshan Nanchang Qiqihar Weihai Jiujiang Yiwu Jingdezhen Wuyishan Shantou Nantong Wuxi Zhoushan Shanghai Hongqiao Ningbo Hangzhou Huangyan Wenzhou Fuzhou Mudanjiang Jilin Changchun Yanji Shenyang Dandong Quanzhou Jiamusi Harbin Dalian Beijing Qingdao Xi an Shanghai Pudong Xiamen Shenzhen Guangzhou Source: GCW China Aviation Database Sanya Haikou
Preparing for further growth, virtually each secondary PRC airport has large expansion plan ongoing or to be launched soon Source: GCW China Aviation Database
Shanghai is a symbol of the market dynamics The two Shanghai airports will add 14 million new passengers in 2010, a 24.6% increase over 2009 Source: Shanghai Airport Authority 22
For a foreseeable future, customer demands in China will continue to focus on availability GDP and Annual Flight Per Capita Comparison in 2009 $3,678 0.47 $39,731 1.78 $46,381 2.3 Source:AirBus
Despite substantial improvements, huge gaps are still seen in availability PRC domestic market service quality index (abstract), 2008 乌鲁 哈尔 西双 张家 呼和 北京浦东广州虹桥深圳成都昆明杭州西安重庆厦门青岛海口长沙大连南京武汉沈阳木齐桂林三亚郑州福州贵阳济南滨 温州宁波太原天津南昌南宁长春兰州合肥版纳 丽江界 浩特 烟台 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 北京 1 0 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ ### 2+ 2+ 2+ 2+ 2+ 0 0 2+ 2+ 2+ 浦东 2 2+ 0 2+ ### 2+ 2+ 0 ### 2+ 2+ 0 2+ 2+ 0 2+ 0 2+ 2+ 0 <2 2+ 0 0 0 0 2+ 2+ 0 0 0 0 0 2+ 0 0 0 0 2+ 0 0 广州 3 2+ 2+ 0 2+ ### 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ <2 2+ 2+ 2+ 2+ 2+ 2+ <1 <2 2+ 0 0 2+ <2 0 虹桥 4 2+ ### 2+ 0 <2 0 2+ ### 0 0 2+ 2+ <1 2+ 0 0 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ 2+ 0 <2 <2 2+ 2+ 深圳 5 2+ 2+ ### <2 0 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ <2 2+ 2+ 2+ 2+ 2+ 2+ <1 0 2+ 0 <2 <2 <1 0 成都 6 2+ 2+ 2+ 0 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ 2+ <2 2+ 2+ 0 2+ 0 <2 <2 2+ 2+ 0 2+ 2+ 0 2+ 0 <2 <1 昆明 7 2+ 0 2+ 2+ 2+ 2+ 0 2+ 2+ 2+ 2+ 0 2+ 2+ 0 2+ 2+ 0 0 2+ <2 2+ 2+ 2+ 2+ 0 <2 2+ <2 0 2+ 2+ 0 0 0 2+ 2+ 0 <2 0 杭州 8 2+ ### 2+ ### 2+ 2+ 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ 2+ 0 2+ 2+ 2+ 2+ <2 2+ 2+ <1 ### <2 2+ <2 0 2+ 2+ 2+ 0 <2 0 <1 <2 西安 9 2+ 2+ 2+ 0 2+ 2+ 2+ 2+ 0 2+ <2 2+ 2+ 2+ <2 2+ 2+ 0 2+ 2+ 2+ 0 <2 2+ 2+ 0 0 0 2+ 2+ 2+ 0 0 2+ 2+ 0 0 <2 2+ <1 重庆 10 2+ 2+ 2+ 0 2+ 2+ 2+ 2+ 2+ 0 <2 2+ 2+ 2+ <2 2+ 2+ <2 2+ 2+ 2+ 2+ 0 2+ 2+ 0 2+ 0 2+ 2+ 2+ 2+ <1 2+ 2+ 0 0 0 0 0 厦门 11 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ <2 <2 0 0 2+ 2+ <1 2+ 2+ <2 0 2+ <2 2+ 2+ 2+ 2+ 0 2+ 2+ 0 <2 2+ 0 0 0 2+ 0 0 0 0 0 青岛 12 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ 2+ 2+ 0 0 <2 2+ 2+ 2+ 2+ 2+ 0 <1 <2 <2 0 0 <2 2+ <2 2+ 2+ 2+ 0 0 2+ 0 <1 0 0 0 0 0 海口 13 2+ 2+ 2+ <1 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ 0 2+ 2+ 0 0 <2 0 2+ <2 2+ 0 <2 <1 <1 0 2+ 2+ 2+ 0 <2 <2 0 0 0 0 0 长沙 14 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 0 0 2+ 0 0 <2 0 2+ <2 2+ 2+ 2+ <2 2+ 2+ 2+ <2 0 <2 <1 2+ 2+ 0 0 2+ 0 0 大连 15 2+ 2+ 2+ 0 2+ 0 0 2+ <2 <2 <1 2+ 0 0 0 2+ 0 <2 0 0 0 2+ 0 0 2+ 2+ <1 <2 <2 2+ <1 0 2+ 0 0 0 0 0 0 0 南京 16 2+ 0 2+ 0 2+ 2+ 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ 2+ 0 2+ 2+ 2+ 2+ <1 <2 2+ <2 0 2+ 2+ 2+ 0 2+ <1 0 0 0 <1 0 <1 武汉 17 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 0 0 2+ 0 <2 0 2+ 0 2+ 2+ 2+ 2+ 0 2+ 2+ 2+ <2 0 2+ <2 <1 0 0 0 0 <2 0 沈阳 18 2+ 2+ 2+ 0 2+ 2+ 0 2+ 0 <2 <2 2+ 0 0 <2 2+ <2 0 0 0 0 2+ 0 0 2+ 2+ <2 <2 <2 2+ 0 0 <2 <1 <1 0 0 0 2+ 2+ 乌鲁木齐 19 2+ 0 2+ 2+ 0 2+ 0 0 2+ 2+ 0 0 0 <2 0 0 0 0 0 0 0 2+ 0 0 0 0 0 0 0 0 <1 0 0 2+ 0 0 0 0 0 0 桂林 20 2+ <2 2+ 2+ 2+ 2+ 2+ 2+ <1 2+ 2+ <1 <2 0 0 2+ 2+ 0 0 0 <1 0 <2 <2 <1 0 0 0 <1 0 <1 0 0 <1 0 0 0 0 0 0 三亚 21 2+ 2+ 2+ 2+ 2+ 2+ <2 2+ 2+ 2+ <2 0 0 2+ 0 2+ 0 0 0 <1 0 2+ 0 2+ <2 0 <1 2+ 0 2+ 0 0 0 0 0 0 0 0 0 0 郑州 22 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ 2+ <2 2+ <2 2+ 2+ 2+ 2+ 2+ 0 2+ 0 <2 <2 0 0 <2 <1 <2 2+ <1 0 <1 2+ 0 0 0 0 <2 0 福州 23 2+ 0 2+ 2+ 2+ <2 2+ 2+ 2+ 0 2+ 0 <2 2+ 0 2+ 2+ 0 0 <2 0 <2 0 <2 <2 0 0 <2 <2 0 <1 0 0 0 <1 0 0 0 0 0 贵阳 24 2+ 0 2+ 2+ 2+ 2+ 2+ <2 2+ 2+ 2+ 0 2+ 2+ 0 <1 2+ 0 0 <2 2+ <2 <2 0 0 0 0 0 0 0 <2 2+ 0 0 0 0 0 0 0 0 济南 25 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ <2 <2 0 2+ 2+ <2 2+ 2+ 0 <1 0 0 2+ 0 0 2+ <2 0 <1 0 0 0 <2 0 0 0 0 0 0 2+ 哈尔 26 2+ 2+ 2+ 0 <2 0 0 2+ 0 0 0 2+ 0 <2 2+ 2+ 0 2+ 0 0 0 0 0 0 2+ 0 0 0 <2 2+ 0 0 0 0 <1 0 0 0 <1 <2 温州 27 2+ 2+ 2+ 2+ 2+ 2+ <2 <1 0 2+ 2+ <2 <1 2+ <1 <2 2+ <2 <1 0 <1 <2 0 0 <2 0 0 0 0 0 0 0 0 <1 <1 0 0 0 0 0 宁波 28 2+ 0 2+ 2+ 2+ 0 2+ ### 0 0 2+ 2+ <1 2+ <2 0 2+ <2 0 0 2+ <1 <2 0 0 0 0 0 0 0 <2 0 0 0 0 0 0 0 0 0 太原 29 2+ 0 2+ 2+ 2+ <2 <2 <2 2+ 2+ 0 2+ 0 2+ <2 2+ 2+ <2 0 <1 0 <2 <2 0 <1 <2 0 0 0 2+ 0 0 0 2+ <2 0 0 0 <1 0 天津 30 ### 0 2+ 2+ 2+ <2 0 2+ 2+ 2+ <2 2+ 2+ <2 2+ 2+ <2 2+ 0 0 2+ 2+ 0 0 0 2+ 0 0 2+ 0 0 0 <1 0 0 0 0 0 <2 0 南昌 31 2+ 0 2+ 2+ 2+ 2+ 2+ <2 2+ 2+ 2+ 0 2+ 0 <1 2+ 0 0 <1 <1 0 <1 <2 <2 0 0 0 <2 0 0 0 <2 0 0 0 0 0 0 0 0 南宁 32 2+ 0 2+ 2+ 2+ 2+ 2+ 0 0 2+ 0 0 2+ <2 0 0 2+ 0 0 0 0 0 0 2+ 0 0 0 0 0 0 <2 0 0 0 0 0 0 0 0 0 长春 33 2+ 2+ <1 0 <1 0 0 2+ 0 <1 0 2+ 0 <1 2+ 2+ <2 <2 0 0 0 <1 0 0 <2 0 0 0 0 <1 0 0 0 0 0 0 0 0 0 <1 兰州 34 2+ 0 <2 2+ 0 2+ 0 2+ 2+ 2+ 0 0 <2 2+ 0 <1 <1 <1 2+ <1 0 2+ 0 0 0 0 <1 0 2+ 0 0 0 0 0 0 0 0 0 <1 0 合肥 35 2+ 0 2+ 2+ 2+ 2+ 0 2+ 2+ 2+ 2+ <1 <2 2+ 0 0 0 <1 0 0 0 0 <1 0 0 <1 <1 0 <2 0 0 0 0 0 0 0 0 0 0 0 西双版纳 36 0 0 0 0 0 0 2+ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2+ 0 0 0 丽江 37 0 0 0 0 <2 2+ 2+ <2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2+ 0 0 0 0 张家 38 2+ 2+ 2+ <2 <2 0 0 0 <2 0 0 0 0 2+ 0 <1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 呼和浩特 39 2+ 0 <2 2+ <1 <2 <2 <1 2+ 0 0 0 0 0 0 0 <2 2+ 0 0 0 <2 0 0 0 <1 0 0 <1 <2 0 0 0 <1 0 0 0 0 0 0 烟台 40 2+ 0 0 2+ 0 <1 0 <2 <1 0 0 0 0 0 0 <1 0 2+ 0 0 0 0 0 0 2+ <2 0 0 0 0 0 0 <1 0 0 0 0 0 0 0 Source: GCW China Aviation Database
Despite substantial improvements, huge gaps are still seen in availability PRC domestic market service quality index (abstract), 2010 北京 广州 浦东 虹桥 深圳 成都 昆明 西安 杭州 重庆 厦门 武汉 长沙 南京 青岛 大连 海口 三亚 沈阳 郑州 乌鲁木哈尔滨济南 天津 贵阳 福州 桂林 温州 太原 南宁 宁波 南昌 长春 合肥 呼和浩兰州 银川 丽江 无锡 烟台 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 北京 1 0 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ <2 2+ 2+ 广州 2 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ <2 <2 0 <2 2+ <2 浦东 3 2+ 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ <2 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ <2 2+ 2+ 2+ 2+ 2+ 0 <2 0 2+ 2+ <2 0 2+ 2+ 0 0 0 虹桥 4 2+ 2+ 0 2+ <2 2+ <2 2+ 2+ 2+ 2+ 0 2+ 0 0 2+ 0 2+ 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ 0 <2 2+ <2 <2 0 0 2+ 深圳 5 2+ 2+ 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ <1 <2 0 0 2+ <2 成都 6 2+ 2+ 2+ 2+ 2+ 0 2+ 2+ 2+ <2 2+ 2+ 2+ 2+ 2+ <1 2+ 2+ <2 2+ 2+ <1 2+ 2+ 2+ <2 2+ 2+ 2+ 2+ <2 2+ <1 2+ <2 2+ 2+ 2+ 2+ <1 昆明 7 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ 2+ <2 0 2+ 2+ 0 2+ 0 0 2+ <2 2+ <2 <2 2+ <2 2+ 2+ 2+ 0 2+ <2 <2 0 2+ 0 0 西安 8 2+ 2+ 2+ <2 2+ 2+ 2+ 0 2+ 2+ <2 2+ 2+ 2+ <2 2+ 2+ <2 2+ 0 2+ <2 2+ 2+ 2+ <2 2+ <2 2+ 2+ 0 2+ 0 <2 2+ 2+ 2+ 0 0 0 杭州 9 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ 2+ 2+ 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ 2+ 0 <2 0 <1 <1 0 <1 0 <2 重庆 10 2+ 2+ 2+ 2+ 2+ <2 2+ 2+ 2+ 0 2+ 2+ 2+ 2+ <1 <1 2+ 2+ <2 2+ 2+ 0 2+ 2+ 2+ 0 <2 2+ 2+ 2+ <2 2+ <1 <2 <2 <2 2+ 2+ 2+ 0 厦门 11 2+ 2+ 2+ 2+ 2+ 2+ 2+ <2 2+ 2+ 0 2+ 2+ 2+ <2 <1 2+ 2+ <2 2+ 0 0 2+ <2 <2 <2 2+ 2+ 0 <2 2+ 2+ 0 2+ 0 0 0 0 0 0 武汉 12 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 0 0 <2 2+ <2 2+ 2+ 2+ 0 <2 <2 2+ <2 2+ 2+ <2 2+ <2 2+ 2+ <2 <2 0 <2 0 <1 0 <2 <1 长沙 13 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 0 0 2+ 2+ 0 2+ 2+ 0 <1 <2 <2 2+ 2+ 2+ 2+ 0 <2 2+ 2+ 2+ 0 <1 <2 <1 <2 0 0 0 0 南京 14 2+ 2+ <2 0 2+ 2+ 2+ 2+ 0 2+ 2+ <2 2+ 0 2+ 2+ <2 2+ 2+ <2 0 2+ <2 2+ <2 2+ <2 <2 2+ <2 0 2+ <2 0 0 0 <2 <1 0 <2 青岛 15 2+ 2+ 2+ 2+ 2+ 2+ <2 2+ 2+ <1 <2 2+ 2+ 2+ 0 2+ <2 0 2+ 2+ 0 2+ 0 2+ 0 <1 0 2+ <2 0 2+ <2 2+ 2+ 0 0 0 0 0 0 大连 16 2+ 2+ 2+ 0 2+ <1 0 2+ 2+ <1 <1 <2 0 2+ 2+ 0 0 0 2+ <2 0 2+ 2+ 2+ 0 0 0 <1 <2 0 2+ 0 2+ <2 0 0 0 0 <2 2+ 海口 17 2+ 2+ 2+ 0 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ <2 <2 0 0 0 0 2+ 0 0 <2 <1 2+ <2 <2 <2 <1 2+ 0 2+ 0 0 0 0 0 0 0 0 三亚 18 2+ 2+ 2+ 2+ 2+ 2+ 2+ <2 2+ 2+ 2+ 2+ 2+ 2+ 0 0 0 0 0 2+ 0 0 <2 2+ 2+ <2 <2 2+ 0 0 <2 <2 0 <2 0 0 0 0 0 0 沈阳 19 2+ 2+ 2+ 0 2+ <2 0 2+ 2+ <2 <2 2+ 0 2+ 2+ 2+ 0 0 0 2+ 0 2+ 2+ <1 0 0 0 <2 2+ 0 <2 0 0 <1 <2 <2 0 0 0 <1 郑州 20 2+ 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ 2+ 2+ 0 <1 <2 2+ <2 2+ 2+ 2+ 0 2+ 2+ <2 <2 <2 2+ <2 <2 0 0 0 <1 <2 0 <1 <2 <2 0 0 0 乌鲁 21 2+ 2+ 0 2+ 0 2+ 0 2+ 0 2+ 0 <2 <2 0 0 0 0 0 0 2+ 0 0 <1 0 0 0 0 0 <1 0 0 0 0 0 <2 2+ 2+ 0 0 0 哈尔 22 2+ 2+ 2+ 0 2+ <1 0 <2 2+ 0 0 <2 <2 2+ 2+ 2+ 0 0 2+ 2+ 0 0 2+ <1 0 0 0 <2 <2 0 0 0 0 <1 0 0 0 0 0 <2 济南 23 2+ 2+ <2 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ <2 0 2+ <2 <2 2+ <2 <1 2+ 0 0 0 2+ 0 2+ <2 0 0 <2 2+ 2+ <1 0 <2 0 0 2+ 天津 24 2+ <2 2+ 2+ 2+ <2 2+ 2+ 2+ <2 <2 2+ 2+ 2+ 2+ <1 2+ <1 <2 0 <1 0 0 0 0 <1 <2 2+ 0 <2 0 <2 <2 2+ 0 <1 0 0 2+ 贵阳 25 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ <2 2+ 2+ <2 0 0 2+ 2+ 0 <2 0 0 0 0 0 <2 <2 <1 0 2+ 0 2+ 0 <2 0 0 0 0 0 0 福州 26 2+ 2+ 2+ 2+ 2+ <2 <2 <2 2+ 0 <2 2+ 2+ 2+ <1 0 <2 <2 0 2+ 0 0 2+ 0 <2 0 <2 0 0 <2 0 2+ 0 <2 0 0 0 0 0 0 桂林 27 2+ 2+ 2+ 2+ 2+ 2+ <2 2+ 2+ <2 2+ <2 0 <2 0 0 <2 <2 0 <2 0 0 0 <1 <2 <2 0 0 <1 <1 0 0 0 <1 0 <1 <1 0 0 0 温州 28 2+ 2+ 2+ 2+ 2+ 2+ 2+ <2 0 2+ 2+ 2+ <2 <2 2+ <1 <2 2+ <2 <2 0 <2 2+ <2 <1 0 0 0 0 0 0 <2 0 <2 0 0 0 0 0 0 太原 29 2+ 2+ 0 2+ 2+ 2+ <2 2+ 2+ 2+ 0 <2 2+ 2+ <2 <2 <1 0 2+ 0 <1 <2 <2 2+ 0 0 <1 0 0 0 0 0 <2 0 <1 <2 <1 0 0 0 南宁 30 2+ 2+ <2 2+ 2+ 2+ 2+ 2+ 2+ 2+ <2 2+ 2+ <2 0 0 2+ 0 0 0 0 0 0 0 2+ <2 <1 0 0 0 0 2+ 0 <2 0 0 0 0 0 0 宁波 31 2+ 2+ 0 0 2+ <2 2+ 0 <2 2+ 2+ 2+ 0 2+ 2+ 0 <2 <2 0 0 0 0 <2 0 0 0 0 0 0 0 2+ 0 <2 0 0 0 0 0 0 南昌 32 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 0 2+ 2+ <2 0 2+ <2 0 2+ <2 0 <1 0 0 <2 0 2+ 2+ 0 <2 0 2+ 2+ 0 0 <1 0 0 0 0 0 0 长春 33 2+ 2+ 2+ 0 0 <1 0 0 <2 <1 0 <2 <1 <2 2+ 2+ 0 0 0 <2 0 0 2+ <2 0 0 0 0 <2 0 0 0 0 0 0 0 0 0 0 <2 合肥 34 2+ 2+ <2 <2 2+ 2+ 2+ <2 0 <2 2+ 0 <2 0 2+ <2 0 <2 <1 0 0 <1 2+ <2 <2 <2 <1 <2 0 <2 <2 <1 0 0 0 0 0 0 0 0 呼和 35 2+ <1 0 2+ <1 <2 <2 2+ <1 <2 0 <2 <1 0 0 0 0 0 <2 <1 <2 0 <1 2+ 0 0 0 0 <1 0 0 0 0 0 0 0 0 0 0 0 兰州 36 2+ <2 2+ <2 <2 2+ <2 2+ <1 <2 0 0 <2 0 0 0 0 0 <2 <2 2+ 0 0 0 0 0 <1 0 <2 0 0 0 0 0 0 0 0 0 0 0 银川 37 2+ 0 2+ <2 0 2+ 0 2+ 0 2+ 0 <1 0 <2 0 0 0 0 0 <2 2+ 0 <2 <1 0 0 <1 0 <1 0 0 0 0 0 0 0 0 0 0 0 丽江 38 <2 <2 0 0 0 2+ 2+ 0 <1 2+ 0 0 0 <1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 无锡 39 2+ 2+ 0 0 2+ 2+ 0 0 0 2+ 0 <2 0 0 0 <2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 烟台 40 2+ <2 0 2+ <2 <1 0 0 <2 0 0 <1 0 <2 0 2+ 0 0 <1 0 0 <2 2+ 2+ 0 0 0 0 0 0 0 0 <2 0 0 0 0 0 0 0 Source: GCW China Aviation Database
Regional jet could have been a good solution in a number of aspects, but it might have missed the boat, at least for the next a few years To fill most of the city-pair gaps, regional jets and a central-china domestic hub would be an ideal solution. However, while aircraft movements in the entire country doubled in 6 years to 1,750,000 per year, RJ operation declined to less than 4% In the historical sense, regional jet might have lost its most important momentum in playing a meaningful role in the PRC market, especially because of the explosive developments of high-speed rails PRC Fleet - 2010 Wide Body -10% Freighter - 6% Narrow Body 76% Regional Aircraft -8% Source: Embraer 26
High-speed rail brings both nightmare and opportunities to the PRC airlines. Intermodal will be the trend of the next decade to meet the new demands Source: Shanghai Airport Authority
In summary, PRC airlines face a different operational environment in meeting with customer demands, and the approach will differ, too In developing products and improving services to meet the changing demands, the PRC airlines face some substantial regulatory obstacles The ATM bottle-neck and related delays: the 76.89% official on-time performance rate Conflict of interests between airports and airlines Essential monopoly of distribution by TravelSky Lack of an open-sky timetable, and thus being precluded from post-alliance era participation Wall to access leading social media To meet changing demands of the new generation of digital travelers, leading PRC carriers start to rely more on technology China officially abolished paper ticket nation-wide in 2007 Web-based direct sale becomes a primary goal for all e-commerce becomes significant part of airline development strategies In-flight systems renovation: a big challenge, and a big opportunity as well Initial, yet not innovative, tests with the native social media Facing un-precedent challenges from high-speed rail, the PRC airline industry need new business modal to meet the customer demands, perhaps for survive as well
The new PRC Airline Business Model: Systematic Products Development and Delivery TM What the customers want? Deliver Happiness! Safety Availability Fair fare Punctuality Satisfaction Happiness HAPPINESS SATISFACTION NEED Product Originated Airlines Service Originated Airlines Operation Originated Airlines Customer Service Philosophy Source: Garfinkle & Wang Associates, d/b/a GCW Consulting
The new PRC airline business model: What, and How? Network Products: The frame and fundamental - Needs/availability Service products: Customer satisfaction Satisfaction and Happiness Information Products Price Products: Defensive competition IT products: Differentiate airlines from one to another, and the future of Airline Industry Service Products Price Products Network Products Source: Garfinkle & Wang Associates, d/b/a GCW Consulting
Does China has high-yield passengers? Source: CNN
Systematic practice: attempts, and the results 新东航产品体系首要目标 - 可供销售的网络产品倍增 MU587/588 航班的有效中转衔接对运市场分别达到 1,014 个和 722 个 产品体系办公室 CAN 7 CKG 7 CTU 7 DLC 7 FOC 7 HFE 7 KHN 7 KMG 7 NKG 7 PEK 7 SHE 7 SZX 7 TAO 7 WNZ 7 WUH 7 CAN 7 CGQ 7 CTU 7 DLC 7 FOC 7 KHN 7 NKG 7 PEK 7 SHE 7 SZX 7 XIY 1 XMN 7 XFN 7 XIY 7 XMN 7 BKK 7 DAD 2 DEL 3 HAN 7 SGN 7 SIN 7 Highlighted points offer only one-way connection BKK 7 FUK 7 HIJ 7 HKG 7 ICN 7 KUL 7 NGO 7 18 Dom / 7 Intl Behind Connections 12:00 14:15 PVG JFK 19:30 16:35 12 Dom / 6 Intl Beyond Connections 38 Beyond Connections 37 Behind Connections ALB 7 ATL 14 BDL 7 BNA 7 BOS 14 BTV 7 BUF 14 BWI 7 CLE 14 CLT 7 ACK 7 ALB 7 ATL 14 BDL 7 BNA 14 BOS 7 BTV 7 BUF 14 BWI 7 CLE 7 CMH 7 CVG 14 DCA 14 DEN 7 DFW 7 DKR 4 DTW 14 FLL 7 IAD 7 IAH 7 CLT 7 CMH 7 CVG 7 DCA 7 DKR 4 DTW 7 GEO 7 GND 2 IAD 7 IAH 7 IND 7 MCI 7 MCO 14 MEM 7 MIA 7 MSP 7 ORD 14 ORF 7 PHL 7 PIT 7 MCI 7 MCO 7 MEM 7 MSP 14 ORD 7 ORF 7 PHL 7 PIT 14 POS 5 RIC 7 RDU 7 RIC 7 SJU 7 STL 7 TPA 7 YUL 7 YYG 7 YYZ 7 ROC 7 SJU 7 STL 7 SYR 7 TPA 7 YUL 7 YYZ 7
Impacts on airlines, and on the industry: 运运运运运产品架构 : 运运运业务系统的衔接流程运运运运运运运运运运运运运运运运中转衔接双边合作运运运运产品对外发布运运运 销售服务支持 中转保障 通程登机服务 旅客服务升级 市场竞争 / 旅客需求分析 联盟产品一致性 产品对标 创意管理 制度和流程改造 产品体系管理 : 范围和基本流程 公司战略品牌战略 产品体系纲要 产品发展规划 产品立项 年度计划和预算 新产品计划 产品筛选 产品维护升级计划 产品系列 : 旅客感知价值 网络产品 网络产品 1 网络产品 N 服务产品 服务产品 1 服务产品 N 运运运运 运运运运 营销推广 RASK 分销渠道 直销渠道 Online 销售收入 Interline 销售收入 两舱收入比例 产品体系质量管理 体系产品推介 产品评估 产品架构监控 产品开发管理 产品对外合作协调 体系产品培训 产品体系考核 产品实施督导 第三方产品监理与验收 产品手册 产品体系质量评估 产品生命周期管理 IT 产品 IT 产品 1 IT 产品 N 价格产品价格产品 1 价格产品 N
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