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World appears on Hainan Airlines radar

By Zhong Nan | China Daily Europe | Updated: 2017-02-19 15:24

China's largest private carrier rides boom in tourism aided by factors such as growing middle class and easy-to-obtain visas

Hainan Airlines, China's biggest private airline by market share and fleet size, will launch more than 10 international flights this year. Among them will be routes to Los Angeles from Chengdu and Chongqing.

The global push is expected to help the airline, a subsidiary of Chinese conglomerate HNA Group, to compete with established rivals in both domestic and global markets.

The new flights are intended to make the most of opportunities presented by the boom in Chinese outbound tourism. Also, economic growth campaigns like the Belt and Road Initiative and various bilateral free trade agreements have led to a rise in people-to-people exchanges, which is spurring demand for flights to certain destinations.

 World appears on Hainan Airlines radar

Passengers take selfies in front of a Hainan Airlines plane after a panda-themed flight from Haikou to Beijing in late January. Provided to China Daily

There are also other reasons for the service expansion.

"Compared with 2016, a growing number of countries are working on simplifying visa procedures for Chinese travelers, including the introduction of digital visas, lower visa fees and shorter waiting periods," says Sun Jianfeng, president of Hainan.

Chinese tourists made 109 million outbound trips in 2016, up 11 percent year-on-year, accounting for 9.6 percent of global tourists, data from the Beijing-based World Tourism Cities Federation show. They spent $165 billion (155 billion euros; 132 billion) globally in 2016, up 28 percent year-on-year -11 percent of international tourism revenue.

The Haikou-based company launched 10 long-haul routes, including from Beijing to Las Vegas, Xi'an to Sydney and Beijing to Calgary, in 2016. Its flights reach more than 200 domestic and global cities, including to a number of cities in North America that are served by direct flights.

The airline operates more than 180 aircraft - one of the world's largest commercial carrier fleets. Its sales revenue was 17.7 billion yuan ($2.57 billion; 2.42 billion euros; 2.1 billion) in the first half of 2016, up 13 percent year-on-year.

Hou Wei, senior vice-president of the airline, says traffic rights for routes connecting major cities are tight, so direct flights to second-tier cities are practical.

"Direct flights between first-tier Chinese cities and second-tier foreign cities, as well as second-tier Chinese cities and top-tier foreign cities, are expected to grow rapidly in the future, given the significant demand for international travel in China," Hou says.

"Passengers certainly prefer nonstop service. We analyze the markets city by city, to study their economic development models, annual fiscal performance, average income and demographics - like if the majority of their population is turning into middle-class consumers given to wanderlust."

In addition to launching new routes and regularly increasing its fleet to boost revenue, Hainan started hiring crew members, such as flight attendants, in countries including Japan, the United Kingdom, France and Russia last year. It currently has more than 4,500 flight attendants. More than 200 of them are from Hong Kong, Macao and foreign countries.

"Even though Hainan Airlines is a latecomer to the global market, pursuing a differential competitive strategy is necessary for the company because other carriers have already scooped up many market resources," says Li Xiaojin, a professor at Civil Aviation University of China in Tianjin.

In taking on competitors, Hainan has to deal with the reality that China's civil aviation market is dominated by the so-called Big Three: state-owned carriers Air China, China Eastern and China Southern.

Li says air traffic across the Pacific Ocean (domestic growth here is rare) has been rising of late on the back of a new visa policy of the United States. At the end of last year, the US started issuing 10-year multiple-entry visas to Chinese nationals in place of one-year tourist visas.

The visa application process has also been simplified, which has stimulated airline sales growth. Expanding China-US trade has also helped boost the industry, Li says.

The company also plans to play a bigger role in advancing transportation services this year for multilateral cooperation in countries along the Belt and Road Initiative.

The infrastructure, trade and services network proposed by the Chinese government in 2013 envisions a Silk Road Economic Belt and a 21st Century Maritime Silk Road covering about 4.4 billion people in more than 60 countries and regions in Europe, Asia and Africa.

"We will launch more routes connecting China with countries and regions along these two trading routes to assist our counterparts in building and operating airports to improve local transportation services, and introduce high-end tourism routes with distinct Silk Road factors," Sun says.

Hainan Airlines launched its first flight in 1993, and has since become a global aviation giant boasting $86.34 billion in assets and about 200,000 employees in China and abroad, according to company data.

It has built a presence in aviation, logistics, hospitality, tourism and ecological technology.

Zhu Wenqian contributed to this story.

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