Boeing 787 to Fuel Hainan Airlines’ North American Growth

Hainan Airlines is currently analysing a number of new markets across North America as it makes preparations for the delivery of its first Boeing 787 Dreamliners later this year. The Chinese carrier has ten 787s on order and is due to receive its first aircraft during the second half of this year. To comply with local legislation, it will initially use the aircraft on domestic and regional routes for a three month period, before expanding into long-haul markets.

The Chinese carrier was one of the early customers for the modern generation Dreamliner and originally committed to receive eight aircraft in a deal announced in September 2005 and formalised just two months later. A subsequent conversion of two options in January 2007 has increased the airline’s commitment to ten units and the type will drive the airline’s ambitious network growth.

Hainan Airlines already serves the North American market with existing direct links to Seattle Tacoma (up to five times weekly) and Toronto Lester B Pearson International (up to twice weekly) from Beijing Capital International Airport, but until now its focus has been more on the local Asian region, supported by strategic developments in Africa and Europe. With Hainan Airlines it is not necessarily all about the largest markets as the airline has been happy to pick up traffic rights to some of smaller European hubs, such as Brussels, Berlin and Zurich, allowing its major rivals to concentrate on serving the main gateways.

Speaking to The HUB at the recent Routes Asia forum in Chengdu, China, a senior network planning executive confirmed that the 787’s range and operating efficiency mean that many routes that could not previously be operated economically with the airline’s existing Airbus A330 equipment would now be possible. “The Dreamliner will enable us to look at new markets and the aircraft are earmarked for expansion into North America in particular,” he said.

In May, there are almost 200 direct weekly flights planned between Mainland China and North America with more than 130 more from Hong Kong. The majority of these flights are from Beijing (98 a week) and Shanghai (89 a week) although China Southern Airlines does also offer flights to Los Angeles and Vancouver from Guangzhou. The US and Canadian west coast cities of Los Angeles, San Francisco and Vancouver have the highest share of direct flights from China, although Chicago O’Hare International, Detroit Metropolitan Wayne County, New York JFK International, Newark Liberty International, Seattle Tacoma International, Toronto Lester B Pearson International and Washington Dulles International are all served on at least a daily basis.

The table below highlights the growth in demand between Mainland China and North America. In 2006 an estimated 2.62 million O&D passengers travelled between the two parts of the world, but this figure has almost doubled to 5.10 million last year. In fact, Year-on-Year growth has been recorded in four of the past five years (2009 being the exception), with demand up by more than a fifth over the last two consecutive years.

Hainan Airlines plans to configure its 787s in a two-class arrangement with 36 Business Class and 179 Economy seats, providing accommodation for 215 passengers in total. Its first aircraft will be delivered in September 2012, according to a company representative but no decision has yet been taken on which long-haul routes they will serve from the start of 2013. “We are a looking at a number of North American markets and expect to make a final decision on our plans around July this year,” the network planning executive confirmed.

The airline could logically use them on its current flights to Seattle Tacoma and Toronto, although a new city pair is a strong possibility. But, alongside the existing markets already served between Mainland China and North America, what other markets could be on the airline’s radar? The table below highlights the ten largest North American destinations by estimated O&D demand that are not currently served with non-stop flights from China.

None of these airports have had a non-stop scheduled service to Mainland China with the exception of Hartsfield-Jackson Atlanta International which was linked to Shanghai Pu Dong by Delta Air Lines between March 2008 and September 2009 and between June 2011 and January 2012.

Hainan Airlines is not alone with its development aspirations in North America and Air China is also planning to use the arrival of the 787 from the fourth quarter of 2015 to possibly expand its own network in the Continent. Speaking exclusively to The HUB earlier this year, Zhihang Chi, Vice President and General Manager North America, Air China, detailed one option under consideration by the airline. “As more efficient aircraft become available, especially the Dreamliner, we can afford to look at secondary markets,” he explained, “markets in North America that are too small and thin to support 747s or 777s may be able to support the Dreamliner.”