Business / Companies

Flying into a brighter future with innovative initiatives

(China Daily) Updated: 2015-07-07 08:27

Hainan Airlines is looking for more opportunities in the market between smaller cities in China and other countries, especially those in the US. The carrier plans to focus more on these cities to avoid direct competition with the "Big Three" in the major cities.

The company opened a new route from Hangzhou to Paris, via Xi'an, in 2014, and from Chongqing to Rome in April. It has also sought approval for the Tianjin-New York route. Once approved, Hainan Airlines will have seven Chinese cities flying to international destinations altogether, and five of them are second-tier cities.

"The GDP growth in some provinces is equal to or even higher than that of some European countries, and the international air travel demand in these provinces is also high," Xin said, adding that the performance of the carrier's international routes from second tier cities like Xi'an and Chongqing has been better than expected.

Xin, however, conceded that it would take more time to develop the intercity market within China.

The huge costs for market development are necessary, Xin said, adding that the development of domestic market would create more opportunities outside the traditional markets.

He cited the example of the Beijing-Seattle route, which was deemed unprofitable seven years ago. However, Hainan Airlines decided to open up the route and after several years, managed to make it profitable.

At the same time, the rapid expansion in the international market has triggered concerns as to whether Hainan Airlines has enough resources, including human resources and aircraft, to support its plans.

Xin dismissed such concerns, and said: "Similar concerns were there when Hainan Airlines was set up 20 years ago. But many were surprised when Hainan Airlines did achieve a 20 percent annual growth."

Meanwhile, the buoyant trend in the capital market is also proving beneficial for Hainan Airlines.

The carrier raised 24 billion yuan through a private stock offering in April and plans to use 11 billion yuan of the proceeds for new aircraft purchases, including 30 Boeing 787-9 jets.

The 787-9s will mainly be used on international routes, especially the North American market, Xin said.

But, Hainan Airlines' global ambitions do not limit to providing air services. Its parent company, HNA Group, holds shares in several foreign carriers.

"All these investments were accomplished by the group, but the purpose is to develop our aviation business globally," Xin said.

The group holds a 48 percent stake in Aigle Azur, a French Airline, and became its second-largest shareholder in 2012.

The group also co-established Africa World Airlines Ltd in Ghana with three other investors in 2012.

Although these foreign subsidiaries are yet to make profits, they are key ingredients in the carrier's global strategy, said Xin. "Every enterprise should have its own going global plan."

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