Air China says it tore up its normal business model with the decision to launch services to Houston, but the move has instantly reaped rewards.
The Star Alliance carrier started operating four flights a week between its Beijing hub and Houston on 11 July using Boeing 777-300ER aircraft, and the route was immediately profitable, says Air China’s vice president and general manager for North America, Zhihang Chi.
“We operated a total of 12 flights in July, and we actually turned a small profit, which I’ve never seen [happen so quickly] before in my career for a new widebody route,” he says.
The decision to launch the service “turned our traditional business model on its head”, says Chi.
“We usually go to coastal or northern cities that are a big ethnic Chinese population base. That’s not the case in Houston.”
One aim of flying to Houston is to capture US-originating “oil” business traffic to China. “Houston is the world’s energy capital,” says Chi.
He adds that the ongoing evolution of the USA-China market was another factor in the decision to launch Houston services: “As the dynamic between the USA and China has been changing, our US operations had been mainly reliant on the US point of sale, but the China point of sale has been rising very fast and today it is almost half and half. That is an enabler for a service like Houston as it mitigates risk.”
Chi says other potential new US routes are being examined, “but we’re waiting for the right airplane”, referring to the delayed delivery of its Boeing 787s. Air China is due to begin receiving its 787-9s in late 2015.
Source: Airline Business