BEIJING - China Southern Airlines, the nation's largest carrier by fleet
size, has announced plans to expand international flights from Guangzhou city in
southern China from 136 per week to 182.
As part of the expansion plan, the company will launch 10 international
direct routes this year departing from Guangzhou, said a company statement.
"(It is) the first time China Southern will open such an extensive route
expansion within a single year," said Si Xianmin, president of the company.
However, analysts argued such a huge expansion may be quite risky as the
demand from Guangzhou, the city where the company is based, seems to be rather
"I think the risk for such a plan is relatively big," Karen Chan, a Hong
Kong-based aviation analyst with Credit Suisse, told AFP Wednesday.
"The company could suffer losses initially because demand (in the region)
doesn't appear to be big," she added Wednesday.
Other analysts said Guangzhou may not be able to attract enough business
passengers, who form the most lucrative market segment.
"Shanghai and Beijing are the two major cities for business travelling," said
Alan Lam, Guotai Junan's aviation analyst in Hong Kong.
"For Guangzhou, the demand lies more likely in outbound tourism as the per
capita gross domestic products in Guangzhou has reached 20,000 yuan (2,280
China Southern's statement said the new routes will link Guangzhou with
Luanda in Angola, Dubai in the United Arab Emirates, Delhi in India, Sendai and
Sapporo in Japan, and a number of offbeat Southeastern Asian tourist cities.
With the new capacity added, the company "will be extending its brand into
all new metropolitan markets," Si said.
However, analysts believed the expansion plan is a result of not only an
ambitious company strategy but also rising competitive pressure.
Lam said the company's operation pressure is growing as traditionally
international flights-oriented Air China, a major rival of China Southern, is
turning its eyes to the domestic market.
"The company has to diversify its routes," he added. "It has been focusing on
domestic flights, which however have not produced great profits."
China Southern, after struggling with losses for years, swung back to
profitability for the first time in five years in 2006 on the back of a rise of
the yuan, the Chinese currency, and a fuel surcharge levied on customers.
According to the statement, the company will have 440 aircraft in its fleet
by 2010, with 68 planes to be put into operation this year.
"The current aircraft of the company are more suitable for short- and
medium-haul flights," Lam said.
"It probably is planning for more international long-haul traffic as the new
planes it buys, like A380, will better serve this purpose."