China Southern Airlines Co's focus on domestic flights made it Asia's largest carrier by passengers. Now, it's adding Airbus 380 aircraft to help challenge Cathay Pacific Airways Ltd and Singapore Airlines Ltd (SIA) on routes to Europe and North America.
The carrier, which flew 76.5 million passengers last year, will begin flying the first of five superjumbos next month. It will be the seventh operator worldwide and the only one in China. The double-decker planes will spearhead the state-owned company's drive to more than double the percentage of capacity deployed on overseas routes to 35 percent by 2015, said Yang Bo, the head of its planning department.
"Flying A380s will put us in a completely different league," he said, declining to name routes for the 506-seat aircraft before an event tomorrow. "We hope to use the planes to build a good brand image and to raise our profile overseas."
The carrier has added services to Vancouver, Auckland and Amsterdam this year as it boosts international capacity 33 percent and tries to develop Guangzhou airport into a global hub rivaling Hong Kong less than 200 kilometers away. Air China Ltd and China Eastern Airlines Corp are also boosting overseas flights as economic growth means the number of Chinese travelers flying abroad this year may rise 13 percent to 65 million, said the China National Tourism Administration.
"The Chinese carriers are in an amazing position," said Qantas Airways Ltd CEO Alan Joyce. "They have got the scale that will make them huge, and I think they will be a big challenge for the Middle Eastern carriers as well as the Asian carriers."
China Southern will fly its first A380 from October 18 to October 28 on routes between Shanghai, Beijing and Guangzhou to test operations and promote the aircraft before moving it onto international routes. The superjumbos will have eight first-class seats, 70 in business and 428 in coach.
The airline plans to boost its total fleet to 645 planes by the end of 2015 from 424 planes as of June. Its other on-order planes include Airbus A330s, A320s, and 10 Boeing 787s.
The carrier fell 0.4 percent to HK$4.68 (60 US cents) at close of Hong Kong trading last Friday. It's dropped 1.7 percent this year, versus a 36 percent decline for Cathay Pacific and a 17 percent drop for Air China, the nation's largest international carrier. Qantas has tumbled 37 percent in Sydney.
Qantas is already competing with China Southern, as the Chinese airline is boosting Australia services as part of its intercontinental push. Similar drives in Europe and North America will follow, partly to offset competition from high-speed trains on domestic routes, Yang said, without elaboration.
The carrier will offer 42 flights a week to Australia and New Zealand from November when it begins services to Perth. It already flies to Sydney, Brisbane, Melbourne and Auckland, mainly using Boeing 777s and Airbus A330s.
Cathay Pacific flies at least once a day to six Australian cities from Hong Kong. Qantas serves Hong Kong and Shanghai from Australia.
"China Southern's aggressive expansion will definitely hit Cathay and other Australian route operators," said Kelvin Lau, a Hong Kong-based Daiwa Securities Group analyst. "Still, a new player may grow the overall market."
The effectiveness of the China Southern A380s in winning premium passengers will depend upon the quality of cabins and other facilities, Joyce said. Qantas operates superjumbos, along with SIA, Air France, Emirates Airline, Korean Air Lines Co and Deutsche Lufthansa AG.
Qantas is setting up a new airline in southeast Asia and another in Japan to target China travelers, while Delta Air Lines Inc and American Airlines have also boosted China flights because of rising demand. Cathay Pacific is refitting business-class cabins, introducing premium-economy seating and adding new long-haul planes.
"We deal with competition by ensuring that we provide the most competitive products and services," the Hong Kong-based carrier said by e-mail.
SIA plans to add flights to more small cities in China, as well as increasing services to major destinations such as Shanghai and Beijing, CEO Goh Choon Phong said last week in Toulouse, France.
China Southern has renovated business lounges and added chauffeur services to lure premium travelers. The changes helped it win the title of world's most improved carrier at this year's SkyTrax awards, which are voted on by more than 18.8 million travelers worldwide.
