Dreams were dashed on June 6 for passengers hoping to be the first to fly on China Southern’s new Boeing 787. The Dreamliner’s maiden commercial flight from Guangzhou was cancelled due to poor visibility at its destination, Beijing. The airline explained that optimal conditions are required when flying a new aircraft type for the first time.
Luckily these were in place the following day when the inaugural flight finally took off.
China Southern has 10 Dreamliners on order, all to be delivered by the end of next year. It isn’t the only Chinese airline to have 787s in the pipeline, with Air China, Hainan Airlines and Xiamen Airlines all scheduled to take delivery between now and 2014. But China Southern is also the first airline anywhere to offer flights on both the Dreamliner and the larger Airbus A380, says the Economic Observer. (Or in more colloquial fashion, it has shown courage as “the first to eat crab”, as the newspaper nicely puts it.)
“The Boeing 787 is suitable for point-to-point high-density medium and long-range direct routes. The Airbus A380 is suitable for large-hub and large-capacity markets. Both will become important wings for China Southern’s hub construction and international development,” a spokesman confirmed, somewhat less colloquially.
One of the risks in being a first-mover is that there is more chance of unexpected things happening. And this proved the case with the introduction of the A380 too, where China Southern has made limited progress in establishing the aircraft type on the longer haul routes for which it has been designed.
Instead, its A380s are largely operating (unprofitably) on domestic flights in China, including the two-hour-and-twenty-minute trip between Guangzhou and Shanghai, which must be the shortest trip of any A380 in the world.
China Southern is flying its A380s on only one international route at the moment, between Los Angeles and Guangzhou, although it will also start using them between Guangzhou and Sydney in October this year.
Despite pushing hard for clearance to fly internationally, progress has been slow. Last October we even reported on speculation that China Southern was trying to get approvals to fly A380s out of Beijing, in a shared operation with Air China, the country’s most powerful carrier, which dominates the aviation hub in the capital (see WiC168).
Unfortunately, this attempt to “pull a tooth out of the tiger’s mouth” seems to have come to nothing, says the Economic Observer (using another idiomatic gem).
China Southern executives will now be desperate that history doesn’t repeat itself with the 787, although it too has started out on the domestic Beijing-Guangzhou route (a distance for which the Dreamliner isn’t designed to fly at full efficiency). Instead they will be counting on wider horizons, especiallylong haul flights to places like Paris, Vancouver, London and Auckland. This will be crucial if the airline is to capitalise on the growth in capacity in its international route network, says CBN. It will also need to overcome challenges like the lower number of international travellers in Guangzhou versus rival hubs in Shanghai and Beijing, as well as the relative proximity of a sophisticated competitor hub in Hong Kong.
In response, China Southern is promoting the ‘Canton Routes’ – a network of one-stop long haul flights connecting the five key markets of Europe, the US, Japan, South Korea and Australia through Guangzhou. Australia is getting particular focus and there were even reports earlier this year that China Southern had made the first moves towards taking a stake of up to 15% in Qantas, the Australian flag carrier, presumably in the hope of accessing more Australian traffic.
China Southern has reported first quarter profits down 82% from the same period in 2012, with analysts warning that its financial performance was hit by Rmb400 million ($65.2 million) of losses from A380 operations alone.
The airline’s bosses will be hoping the new Dreamliners won’t be a similar source of red ink.
© ChinTell Ltd. All rights reserved.
Exclusively sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.