Air China

China Southern gets into dogfight with Air China

PUBLISHED : Friday, 27 July, 2012, 12:00am
UPDATED : Friday, 27 July, 2012, 12:00am

China Southern Airlines' talks with Beijing-based Air China about plans to jointly fly the Airbus 380 on international routes from the capital have stalled, an insider told the South China Morning Post.

The Guangzhou-based carrier, which hoped to operate the A380 on flights from Beijing to Bali and New York, will launch in autumn its first international A380 service - from Guangzhou to Los Angeles - since it introduced the jumbo jet in October.

The airline now flies three A380s from Beijing to Guangzhou and from Beijing to Hong Kong, and a fourth aircraft has yet to be delivered.

'We are burning money on every single A380 domestic flight, as it's designed for long-haul flights,' said an executive at China Southern who declined to be identified. Short-haul flights increase the number of flight cycles and cut the lifespan of the A380's four engines, pushing maintenance costs sharply higher.

China Southern prefers to operate the A380 from Beijing because foreign firms prefer to locate their mainland headquarters there, making the city a more lucrative hub for international flights than Guangzhou.

However, the insider, a China Southern executive who declined to be identified, said Air China did not want China Southern to divert its international passengers.

The Civil Aviation Administration of China intervened and asked China Southern to wet-lease some of the A380s to Air China in exchange for rights to operate flights from Beijing.

In wet leasing, a company leases cabin crew and pilots along with the aircraft.

'It's completely outrageous. Why on earth do we have to let Air China operate our A380s, given that we have the expertise to run it?' the China Southern executive said.

Air China spokesman Rao Xinyu declined to comment on any talks between the two carriers and on Air China's involvement in China Southern's application to operate international flights from Beijing.

While theoretically Air China cannot interfere in China Southern's application, which is purely a regulatory matter, an analyst said other factors could come into play.

'However, given that Li Jiaxiang, the director general of the Civil Aviation Administration of China, is a former Air China chairman, I wouldn't be surprised if the regulator found in Air China's favour,' the analyst said.

Another proposal being studied by both carriers was to swap some seats on the A380 with other aircraft operated by Air China, with the aim of minimising the loss of passengers from Air China to China Southern, another person close to the matter told The South China Morning Post.

'The application for air rights from Beijing is still in process,' said Xie Bin, a spokesman for China Southern. The applications for the licences for Beijing-Bali and Beijing-New York flights had been submitted more than a year ago, he said but did not comment on why the approvals were taking so long.

Xie said the airline plans to use A380s to replace Boeing 777s for the daily flight between Guangzhou and Los Angeles from October 12. The firm's website says an economy-class ticket will cost 4,880 yuan (HK$5,928), or 6,216 yuan with tax.