Major Chinese Airlines Encroaching On One Another’s Turf

Major Chinese airlines are increasingly encroaching on one another’s turf, despite former official reluctance to let them do so.

By long-standing practice, the Civil Aviation Administration of China (CAAC) has generally let small airlines move into big airports that are other carriers’ home territory, since the new arrival cannot affect competition much. But the agency has traditionally constrained big airlines more tightly.

Only from time to time has one of the big carriers been allowed to raise its official status in the hometown of another. But over the past year, there has been a surge of such activity. Eagerness to fill new airport capacity appears to explain the CAAC’s concurrence.

Here are some of the developments around the different cities.

Air China has been a creeping encroacher, setting up intercontinental services to notably strong European destinations in Shanghai at the expense of China Eastern. Since before 2010, it has opened Shanghai services to Barcelona, Spain, as well as Frankfurt, Milan, Paris and, in 2019, London.

Hainan Airlines has sustained a push into the home territory of another major carrier, Shenzhen Airlines. Support from the Shenzhen city government has presumably made this possible as Hainan Airlines’ parent, HNA Group, struggles with debt.

China Eastern has also agreed in January to build up at Shenzhen, the home of Shenzhen Airlines and a source of competition for China Southern, the home of which is Guangzhou, just 100 km (60 mi.) away.

At Xiamen, the main challenge for Xiamen Airlines is the local government’s agreement for China Eastern to set up a base, presumably with a blessing from the CAAC. China Eastern, based in Shanghai, said it will build up at the city before the new airport opens, aiming at establishing high-frequency services to Beijing, Chengdu, Kunming and Shanghai and “at a suitable time” connecting Xiamen with major U.S. and European destinations.

Air China, based at Beijing, has lately suffered most from outsiders’ incursions. Among the encroachers, China Southern has assigned a new brand, Xiongan Airlines, to its major base company at Beijing Daxing International Airport. This strongly implies that the operation will get its own air operator’s certificate with a headquarters at Daxing, thereby ranking above China Eastern—and present a greater threat to Air China.