China’s Smaller Cities Big Opportunity for Airlines

Skift Take

China’s push to expand aviation to smaller cities in the country is great news for Boeing and Airbus, which will be supplying the regional aircraft needed for such itineraries. Airlines, such as Finnair, are grabbing the opportunity to start service to smaller cities in China and other carriers will do likewise.

— Dennis Schaal

The number of air passengers in China rose 10.7 percent in the first six months of the year, the country’s aviation regulator said, as it urged carriers to expand into less-developed regions.

The Civil Aviation Administration of China said in a statement posted on its website that 186 million people flew into and out of Chinese airports during the half. Passenger volume grew at a slightly slower pace than the 11 percent increase in the first six months of 2013.

Airlines should expand into smaller cities, particularly in the country’s midwestern region, the statement said, citing remarks by agency chief Li Jiaxiang at an aviation work conference yesterday. Li said the agency also wanted to improve the operating environment for low-cost carriers.

The push to expand regional air travel could benefit Boeing Co. and Airbus Group NV, which manufacture the midsized aircraft needed to serve lower-volume routes.

The regulator said it would work to set up a civil aviation investment fund and attract “social capital” to aid the sector’s expansion. The statement said air cargo volume rose 6 percent in the first half of this year.

China is expected to account for about 40 percent of the jets that will be delivered to the Asia-Pacific area over the next 20 years, said Randy Tinseth, vice president of marketing at Boeing’s commercial airplane unit. Boeing said May 14 it would sell 50 single-aisle 737s with a list value of at least $3.8 billion to a discount carrier being set up by China’s Juneyao Airlines Co.

China Eastern Airlines Corp. said July 2 it was starting its first low-fare carrier, a move that may encourage bigger rivals Air China Ltd. and China Southern Airlines Co. to consider similar steps.

To contact the reporter on this story: Clement Tan in Hong Kong at [email protected] To contact the editors responsible for this story: Anand Krishnamoorthy at [email protected] Brendan Scott, Andrew Monahan

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