China Southern plans to serve Brisbane and Auckland

China Southern Airlines has applied to the CAAC (Civil Aviation Administration of China) to launch a daily flight from its Guangzhou hub to Brisbane, with an extension to Auckland, New Zealand. Routes News examines the choice of routing and argues that a partnership with Virgin Blue could seal it long-term success on the China-Australia sector.

China Southern's Guangzhou-Brisbane service, which is planned to start in September will complement its existing three flights a week to Melbourne and a daily to Sydney (both from its Guangzhou hub). If approval is granted from the Chinese Aviation Authority, CAAC), it will become the first Chinese carrier to serve Auckland.

The planned service represents an ambitious expansion into the Australian market, which is perhaps unsurprising, given the rise in demand for flights between Australia and China in recent years, owing to increasing tourism, migration and business links. Between January 2009 and 2010, over one million (1,073,779) O&D passengers flew between Australia and China, up from 999,951 in the same period between 2008-2009 and 934,231 from 2007-2008 (IATA BSP, Airport IS).

The proposal to extend the service from Brisbane to Auckland makes sense for China Southern as the aircraft would have to be parked on the ground at Brisbane for over 11 hours to offer a convenient schedule for inbound and outbound flight to Guangzhou. Demand would also seem to support the route, as over 10,000 passengers flew indirectly between Auckland and Guangzhou between January 2009 and 2010, IATA BSP data illustrates.

As China Southern's major hub, Guangzhou flies to 26 of the carrier's total international destinations (compared with 4 from its Beijing hub). It's a wise choice of hub for the carrier to penetrate the Australian market because of its southern location and shorter sector length [than Beijing]. However the carrier will have to compete with Cathay Pacific's daily service from neighbouring Hong Kong to Brisbane, which uses an A330/A340 mix. The airline is firmly entrenched in Australasia, serving seven markets and has a firm partnership with oneworld partner, Qantas.

Potential Tie-Up with Virgin Blue?

China Southern could well tie up with Virgin Blue to make effective use of this expansion. Virgin Blue is the second largest airline in Australia, flying to 28 domestic points and has a 24% share of the market (Flightbase: 14-20 June, 2010). This would also strengthen the Skyteam's global position, particularly as Virgin Blue's long-haul operator, V Australia has codeshare agreements with Delta Airlines (the largest carrier in the Skyteam) on its daily Los Angeles-Sydney service.

In turn, China Southern - through offering fifth freedom tickets from New Zealand - can add connectivity to Europe through its Guangzhou hub to five destinations in the former CIS, and to the major European hubs of Amsterdam and Charles de Gaulle where passengers can access Air France and KLM flights.