Branch-line Aviation to be Booming in China

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Last updated at: (Beijing Time) Saturday, March 29, 2003

Branch-line Aviation to be Booming in China

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The restructuring of China's airlines last year will provide growth opportunities for branch-line aviation in the coming years, said Qiu Lianzhong, vice-president of networking, strategy and planning for Air Canada.

Speaking at a forum marking the 100th anniversary of human aviation, Qiu said that hub building has become more significant since the restructuring. Considering the relatively short length and lack of frequency for most Chinese domestic routes, deployment of branch-line aircraft will be the most economic way to build a hub and spoke network.

Based on statistics from the General Administration of Civil Aviation of China (CAAC) and the most recent winter schedule, the share of branch-line jet flights grew from 4 percent in 2000 to 12percent in 2002.

Qiu said the increase of branch-line flights mainly comes from local airlines. Deployment of branch aircraft now seems focuses on point-to-point markets, but as the "Big Three" airlines complete their integration, another surge of branch hub flights can be expected.

Sustainable branch aviation growth depends on the profitable operation of branch aircraft, Qiu said, and Chinese airlines need to prove that branch markets can generate profit.

The route performance is determined to a large degree by the market size and the competitive structure of the market. It is critical for a branch-line operator to be guided by the proper market strategy and to select the right routes, Qiu added.

Out of 622 domestic routes in China, only 122 have two or more daily flights, while more than half have less than daily frequency. But the number of seats per flight does not vary much within these thin markets, with between 106 to 126 seats average per flight.

This shows that branch-line aviation has much potential in the domestic Chinese market, according to Qiu.

When Chinese airlines transform from a point-to-point carrier to a hub-and-spoke carrier, they usually want more frequency and smaller gauge to improve connection opportunities.

More importantly, after the restructuring, Chinese airlines are gradually turning from government-run organizations into profit-oriented businesses. Market competition will drive the airlines to alter operation strategy so as to raise efficiency, Qiu added.

Last year the CAAC announced a series of measures to promote branch-line aviation, such as reducing passenger airport fee, encouraging airlines to buy branch-line aircraft manufactured in China, prioritizing the branch route approval process and allowing more flexible pricing on branch routes.

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