Sky's the limit

With its new aircraft soaring into the skies beginning in June, Grand China Express now wants to be the biggest regional carrier in Asia within the next three years.

"At present, our 38 regional jets which cover 55 cities with more than 80 scheduled flights have made Grand China Express the biggest regional carrier in China with 40 percent of market share. However, we are aiming to be the top player in Asia by 2012, grabbing 90 percent of the regional airline market," says Chen Feng, chairman of Hainan Airlines, the parent company of Grand China Express.

Hainan Airlines ordered 50 E-190s, which have between 98-114 seats and 50, 50-seat Embraer ERJ-145s on behalf of Grand China Express in a deal with a list value of $2.7 billion in August 2006. To be totally delivered before 2012, the 100-jet fleet will cover 100 cities with 500 flights.

By this year, seven of the E-190s will be delivered from Brazilian aircraft maker Embraer to Grand China Express. In addition to its current seven ERJ-145s, the carrier will receive one 50-seat jet every month from Harbin Embraer Aircraft Industry Co Ltd, the joint venture between Embraer and AVIC II.

The company also said that it plans to have a total of 100 E-190 jets in the future.

Only 6 percent of all carrier planes in China have 150 or fewer seats. That is compared to 30 percent of the air carriers worldwide whose planes have 150 or fewer seats, says Guan Dongyuan, managing director of Embraer China.

"Although China's aviation market is growing at an annual speed of 15 percent, of 1.5 million flights last year, only 30 percent were made by planes with 100 seats or fewer," says Guan.

"The seat demand for a single flight of 70 percent of China's 112 air routes is typically less than 300. And regional aircraft could replace those planes at a lower cost, with lower pollution and higher efficiency."

Guan also tells China Business Weekly that in the near future, the demand for smaller regional aircraft in China will be between 730 and 1,100 planes.

"So we will plunge the savings on the low cost into better services to make a profit," says Yu Wenyong, president of Grand China Express, which is targeting the western region and second-tier cities.

"We have chosen Tianjin and Xi'an as our operational headquarters, with an eye to cover North China, Northeast China, Northwest China and Southwest China," says Chen.

"For example, Tianjin is the hub of the Bohai-ring Economic Zone which covers five provinces with 32 cities, however, the throughput of Tianjin Binhai Airport stands at merely 3.86 million people (as of 2007), the 30th biggest in China. So we see great potential in such destinations," says Chen.

Statistics show that in 2007 almost 800 out of 1,021 airlines carried less than 300 passengers per flight.

"These airlines should be flying 100-seats-or-fewer planes to ensure the passenger rate of the carrier, and to provide more frequent flights for passengers," says Chen.

(China Daily 09/08/2008 page12)