Spring in the step for budget airline carrier

( China Daily )

Updated: 2014-02-07

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Spring Airlines Co Ltd, the first low-cost carrier in China, is continuing to explore the international market with the aim that it will account for 30 percent in its network of routes by the end of 2014.

The carrier took off in 2005 and runs 15 international routes, making up 18 percent of its entire network by the end of 2013.

"Northeast Asia, including Japan and South Korea, and most Southeast Asian countries are all our target markets," said Wang Zhenghua, chairman of Spring Airlines.

"The 15 million square kilometers around Shanghai are all our target regions, so long as our Airbus 320 fleet can reach them," he said.

Japan is a main market for Spring Airlines. Currently, it runs three routes from Shanghai to Japan.

The carrier's branch company in Japan will start work in May. It will launch some domestic routes in Japan then.

"The investment into the branch is huge," Wang said, because they pay Japanese staff high salaries.

But the carrier considers it must do so as a key step toward its international strategy, he added.

If the branch company proves successful in Japan, the carrier may undertake a similar strategy to open more routes in other markets, such as Southeast Asian countries.

Spring Airlines, which was the only budget carrier in China for a long time, has already proposed launching an initial public offering that may be on the list in 2014.

The carrier's average load factor in 2012 was 95 percent, while the load factor of the whole industry was more than 80 percent.

At the very beginning, about 80 percent of passengers of the carrier were tour groups from its parent company, Shanghai Spring International Travel Service Ltd, but the percentage has fallen to no more than 15 percent, Wang said.

After developing over the years, Spring Airlines also has its own stable group of customers.

"As many as 75 percent of our ticket-buyers are from the younger age group below 30 years of age," said Zhang Wu'an, spokesman for Spring Airlines.

In order to lure young customers, Spring Airlines is active on social media Internet sites and uses innovative marketing techniques, such as blind-date flights.

The young passengers are used to buying tickets through mobile terminals and official websites, which encourages the carrier to add more direct sales, Zhang said. It is also a cost-saving practice.

China's increasing individualized tourism provides passenger flows to the budget airlines, as well.

China's inbound tourism number was almost 3 billion person-trips in 2012. No more than 5 percent of them were part of tour groups, according to a Chinese tourism report on vacations booked personally released by China Tourism Academy.

"The percentage of such travelers in China is already close to that of developed countries," said He Yong, deputy general manager of Ctrip International's tourism department.

The price of air tickets from Spring Airlines is usually 42 to 45 percent lower than the average price on the market. It is attractive for travelers with limited budgets who want to determine the scope of their holiday personally.

The carrier is well-known for its series of tickets priced 9, 99 and 199 yuan respectively. It provides 20 to 30 percent of the tickets with special discounts on every flight, Zhang said.

"Although we provide many discounts, Spring Airlines still manages to maintain a profit through saving costs and increasing income," he said, without specifying details.


(China Daily 02/07/2014 page14)

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