Page 9 - AAA JANUARY - FEBRUARY 2017 Online Magazine

FEATURE AIRLINE FORECAST

see the airline opt for an interim solution. Perth and Adelaide, as well as Shenzhen to
The airline also plans to open up services Sydney. China Eastern has also increased its
via Japan to Las Vegas, Los Angeles and San Australian footprint to 58 weekly services
Francisco. Its arch rival Malaysian Airlines over the Christmas-New Year holiday period
is looking to quit its A380s into charter as it moves to take advantage of a 23 per cent
operations and replace them with far more growth this year in the number of Chinese
competitive and nimble A330neos or 787s visitors heading down under.
in 2017. Chinese airlines are certainly on Countering these increased offerings
the move. An excellent example is China from lower cost airlines traditional carriers
Southern Airlines which signaled further such as Singapore Airlines and Cathay Pacific
expansion into the Australian market with a Airways are taking delivery of new A350s
deal with Tourism Australia aimed at boosting that will cut operating costs by up to 25 per
marketing activities in China. The three-year cent while providing passengers with better
MOU was signed in December shortly after amenities. Further south, Garuda Indonesia
the arrival of China Southern Airlines flight has new wings and after resuming flights to
CZ663 from Guangzhou, the first direct Europe it is looking to resume US operations.
commercial passenger flight between China Clearly the old order has been destabilised
and South Australia. China Southern chief and an interesting dynamic in this has been
executive and president Tan Wan Geng said the collapse of oil prices. At the recent CAPA
he had great confidence in the Australian Asia Aviation Summit held in Singapore its
market. “Australia is a market we value highly founder and Chairman Peter Harbison said
where we still see opportunities to expand that in the past two years the industry has
our operations further, as demonstrated by singularly changed as a result of the collapse
our decision to add Adelaide to our global in oil prices. “Despite fluctuations and an
network,” he said. The comments came less expected slow tick upwards, fuel is not
than two weeks after governments of both projected to be a major hurdle through 2017.
countries signed an open skies agreement The downside is that the rapid decrease in
lifting restrictions on operations between fuel prices drove yields to plummet, erasing
major cities according to AirlineRatings.com. some – even all – of the benefit of low fuel
China Southern has increased capacity to prices.’’ “This pattern begins to enter a
Australia by 35 per cent in the past year, with dangerous cycle as low prices create traffic
56 weekly services now operating between growth, which in turn expects even lower
Guangzhou and Sydney, Brisbane, Melbourne, fares. IATA has observed yield decreases

China Southern Airlines has
signalled its intent to target the
Australian market and increased
its capacity to Australia by 35
per cent in 2016
WWW.GBP.COM.SG/AAA JANUARY / FEBRUARY 2017 ASIAN AIRLINES & AEROSPACE 9