Skift Take

Air China has evolved from a transport utility to a strong airline brand, and plans to grow its routes around the globe.

Air China has focused on improving products and services to satisfy the needs of mobile Chinese and International travelers, and encourage tourism at home and abroad.

During the CAPA Airlines in Transition Conference in Dublin, we had an opportunity to sit with Air China’s Vice President and General Manager for North America, Dr. Zhihang Chi, who shared insights on evolution of the airline, the growing influence and unique needs of the Chinese traveller, and plans for growth in an increasingly competitive market.

Brand Evolution

As Dr. Zhihang Chi describes it, Air China has evolved from a government-owned company, run largely as a public transport utility, to a publicly traded airline enterprise focused on the quality of its brand.

“We need to compete for capital and we need to compete for business,” he said. “We needed to get better and to change so we have invested very heavily in our brand and our product. We have a very strong brand recognition in China, so our focus has been to gain brand recognition internationally.”

To accomplish this, Dr. Zhihang Chi explained, Air China has followed the example of alliance partners Lufthansa and United, and taken inspiration from Cathay Pacific, in which Air China has a 30% stake.

Those examples have encouraged Air China to make changes in its product and services, as with its innovative ground-to-air brand storytelling experience which the airline revealed in 2014.

“The pace that we have upgraded fleet and upgraded our product, I would say, has been significantly dramatic,” said Dr. Zhihang Chi. “Just about seven or eight years ago, we didn’t even have lie-flat First class, let alone lie-flat Business class. Today all our international long haul flights have lie-flat seats both in Business and in First. In a nut shell, that’s what we’re trying to do. We’re trying to build a product and brand that are accepted by not just Chinese travelers but by the general public world over.”

Connected Travelers

Passenger mobile trends and the ready sharing of information on social media have also encouraged improvements.

“It’s both an opportunity and a huge challenge. In the old days, if something goes wrong it will take days for people to find out about it. Today, if something goes wrong everyone finds out about it immediately. So it is a huge challenge for Customer Service, PR, Communications, Marketing. On the other hand, it often provides us with a wonderful platform to market ourselves and to communicate with our customers,” Dr. Zhihang Chi said.

“China’s social media is WeChat. It is Facebook, Twitter Whatsapp, Instagram all rolled into one. You can send messages of unlimited size and you can send audio messages, video, photographs — everything. It’s a very powerful tool. As with everything else it’s a double-edged sword. We manage it and we try to leverage it,” he added.

Chinese Tourism

The aim of the airline’s progress is to encourage tourism in China and also to support the strong desire of Chinese travelers to see the world.

“China used to be a very, very popular destination. Especially, from my experience, in the United States. But in the past couple of years things have changed a little bit. Tourist traffic to China has been steady,” said Dr. Zhihang Chi.

The appreciation of Chinese currency, and negative media reports about pollution and food safety, Dr. Zhihang Chi says, have affected perceptions around the world somewhat stemming the rise of tourism. “It made it all the more important that we do a better job, that China do a better job, of marketing itself. I think the government has invested quite a bit in destination marketing in some key regions in the world like the U.S,. Europe, and Australia,” he said.

“We are an active participant in that effort. If more people travel to China, we get more business. When tours are organized, we offer preferred transportation. We are an active participant and China is actively promoting itself,” Dr. Zhihang Chi added.

Domestic demand to explore the world is strong, but Dr. Zhihang Chi suggests more can be done to make Chinese tourists feel more at ease when traveling abroad.

“The Chinese tourist is very curious. For them, going places is very, very important. Not only for them, but for their children especially. They will brave all the risks and try to see the world. But they are faced with certain challenges. Language is one of them. Culture is another. We often say in the United States, in this case to CVBs [Conventions and Visitors Bureaus]: are you ready for the Chinese tourist? That’s actually a valid question. The growth in outbound travel from China is so dramatic that it does put strains on capabilities and infrastructure of the receiving countries. For example, there are many quirks,” he said.

“For example, they want to drink hot water, so you have a hotpot in the hotel room, and they always want slippers, and noodle soups. These are small things, but very important. Many locations don’t have Chinese signs, don’t have Chinese speaking staff. Those all present challenges.”

The Other Open Skies

Though largely ignored while the focus is on Open Skies debates with the big three Gulf carriers and Norwegian Air Shuttle, in the U.S., Open Skies agreements in China also pose a challenge.

The Big 3 U.S. carriers have capitalised on existing Open Skies and, as traffic between the U.S. and China builds, they want to increase route allocations while building up potential tensions with Chinese carriers who also plan to grow.

“I try to be sensitive and I try to be subtle, but the fact of the matter is that there is a concern that there will be some constraints placed on growth, potentially,” said Dr. Zhihang Chi. “At the time [existing Open Skies agreements were drafted] there were so many frequencies that nobody dreamed they would be all used up some day. But before you know it, we’re all bumping against the ceiling. We need to sit down and start talking about further opening the market. That’s when we hit a wall.”

”It used to be that we were a little brother, and the bigger brother was dominating. So then it was: ‘Open Skies, Open Skies, Open Skies.’ Now you find that the staple of the market is the Chinese passenger. So, obviously, we have a higher chance of getting that business than our U.S. competitors. Then you see a shifting position,” he said.

Air China is growing intends to continue growing.

As Dr. Zhihang Chi said, “We are very ambitious. We want to become relevant. We want to promote and bring people together, build bridges between China and the world. In fact, we want to build bridges not just between China and the world, but between other countries in the world.”


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Tags: air china, china, china outbound, Open Skies agreements

Photo credit: Air China’s Vice President and General Manager for North America, Dr. Zhihang Chi [far left] laughs off discussion over potential Open Skies conflicts at CAPA Airlines in Transition, Dublin. As he reveals to Skift, however, Air China's growth strategy is serious business. FCMedia

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