Air China expands in Australia

Air China is ramping up its services to Australia with a number of significant route developments in the fourth quarter of this year. As part of this, Air China will increase its Beijing-Sydney service to a daily flight from its current four-times weekly operation. At Melbourne the airline currently operates from Beijing via Shanghai Pudong on a four-times weekly basis. This will be ramped up to five a week from December 5, plus there will be a brand new twice-weekly non-stop flight from Beijing to Melbourne. This means that by December 2010 Air China will be operating a total of 18 weekly frequencies into Australia.

CHINA-AUSTRALIA MARKET

Even without the introduction of these new services, Air China is the leading carrier in terms of weekly seat capacity between China and Australia.

Source Flightbase September 14-20, 2010

Air China's new twice-weekly service to Melbourne from Beijing will be operated by A330 equipment and IATA BSP data confirms that there is clear demand on this route. Over 77,000 O&D passengers flew this route between April 09-10. Of this, 41% flew on its extension via Shanghai Pudong, leaving 59% transiting via other points, particularly via Singapore with Singapore Airlines. Air China will be targeting this traffic, as well as the increasing flows between Australia and China.

The China to Australia market is a fast growing one. Between April 06-07, over 861,000 passengers flew between the two countries. By 2009-2010 this had risen to over 1.1 million passengers during the same period.

Source IATA BSP data (Airport IS) April 09-10

The potential for new non-stop services is highlighted by the fact that Cathay Pacific leads the way in terms of passenger share capturing 21% of all traffic from its Hong Kong base on its non-stop services to Adelaide, Brisbane, Melbourne and Sydney.

POTENTIAL FOR FURTHER GROWTH

Air China has planned to go daily to Melbourne and Sydney from Beijing for several months, however slot restrictions at both Sydney and Beijing slowed the process. Despite this, Air China's traffic to Australia is performing well, particularly leisure traffic, due to Sydney being such an iconic destination for Chinese tourists.

The new daily services will improve access for Chinese passengers into Australia, but the airline will have the issue of whether to operate a turnaround service, or to leave the aircraft on the tarmac for 11 hours and make the service as attractive as possible for two-way intercontinental traffic. A potential solution is to operate a double-daily service, such as China Southern has been rumoured to be considering to Melbourne.

With growing traffic and commerce between the countries, demand looks set to increase further and slot restrictions aside, Australia continues to be a growth market for China.