China Southern sales hurt by riots in Xinjiang

PUBLISHED : Saturday, 11 July, 2009, 12:00am
UPDATED : Saturday, 11 July, 2009, 12:00am

The riots in Xinjiang have taken their toll on tourism in the area, wiping out significant sales booked by China Southern Airlines, which has a hub in Urumqi and claims more than 50 per cent of market share, according to a company official.

The region, famed for its variety of landscape ranging from lakes and deserts to glaciers, is the airline's third-largest hub after Guangzhou and Beijing.

Holidaymakers who usually flood the northeast province from July to September when the weather is best for sightseeing were staying away from the tourist spots this year, said the airline official.

'We are working out some remedial plans with the tourist agents to channel those people who have cancelled their trips to Xinjiang to other places where we have a strong presence,' said the official.

The airline has scrapped plans to use bigger aircraft to serve Urumqi this year.

Usually during peak season, the airline doubles capacity on the route by replacing its B757 with the B777, which has more than 300 seats.

A China International Capital Corp (CICC) report said because of the unique tourist pattern in Xinjiang - where profits in the third quarter can offset losses suffered in the rest of the year - China Southern's bottom line would inevitably be affected.

It is estimated that China Southern derived 6 per cent of its total passenger numbers last year from Urumqi airport, according to a recent Nomura report.

The Guangzhou-based carrier would be hardest hit among the Big Three airlines as Urumqi contributes only 1 per cent to total passenger numbers for Air China and China Eastern Airlines.

However, if Beijing reiterated the tourist ban approaching the celebrations for the 60th anniversary of the People's Republic of China in the face of threats from dissidents in Xinjiang, the impact on mainland airlines would be systemic, the CICC report said.

Last year, Beijing introduced tough controls at the border before and during the Olympic Games which dampened demand in international traffic, adding to the woes of mainland carriers before the global recession.

Mainland carriers have just started to come out from the shadow of the economic slowdown with a rebound in domestic traffic since the first quarter owing to reductions in airfares.

Changing course

Airline scraps plans to use bigger aircraft to serve Urumqi this year of China Southern's passenger numbers last year, Urumqi accounted for: 6%