China Eastern’s gravity defying passenger numbers


China Eastern (Custom).jpg

China Eastern’s monthly increases in passenger traffic seem extraordinary considering most other carriers around the world are still experiencing falls in monthly traffic.

The Shanghai-based carrier has just posted an 18% rise in RPKs in July. It is all thanks to China’s strong domestic market.

International RPKs that month fell 2% year-on-year and domestic RPKs increased 29%.

The 2% fall for international is a good effort relative to larger carriers such as Cathay Pacific Airways and Singapore Airlines which posted 8% and 13% falls respectively in July passenger traffic.

But the real numbers also paint a different story. China Eastern’s international passenger business is relatively small. It only had 345,000 international passengers in July. Compare that to the likes of SIA which had 1.44 million international passengers in July.

SIA must be relieved that they didn’t buy into China Eastern in light of the Shanghai carrier’s financial woes and need for government bail-outs. The traffic figures also show China Eastern has a big task ahead to make its international service offering of an international standard.

While it may be tempting for China Eastern to just focus on the domestic market, that is low margin business.

Chinese carriers cannot continue to simply leave the international passenger business to foreign carriers.

One Response to China Eastern’s gravity defying passenger numbers

  1. Kinbin 20 August, 2009 at 8:33 am #

    The increase in flight frequencies and traffic volume between Taiwan and China is probably key to RPK increases.

    Without radical overhauling of their existing business service model on higher yield international pax, which falls far short of the datum set by CX and SQ , one should not be surprised if CEX continues to post operational losses in the quarters ahead.

    Unless un-sustainable short term profitability is derived from any post-merger intangibles, or from ‘creative’ accounting. Such in-house creativity ought to be deployed into improving their operating models instead.

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