China Eastern Airlines

China Eastern to expand cross-strait alliance

China Eastern expects transit passenger volume in Pudong Airport to double to 20,000 by 2015

PUBLISHED : Saturday, 05 January, 2013, 12:00am
UPDATED : Saturday, 05 January, 2013, 3:13am

The alliance between China Eastern Airlines and three other carriers providing cross-strait services has announced big ambitions as it seeks to boost market share on the lucrative route.

China Eastern expects its co-operation with Taipei-based China Airlines, Guangzhou-based China Southern Airlines and its subsidiary Xiamen Airlines will expand to code-sharing and scheduling alignment, in a bid to aid the movement of transit passengers from Europe and the United States to Taiwan via Shanghai.

"We forecast that our international transit passengers in Pudong Airport will increase to 10,000 per day this year from 6,000 last year," said Shan Chuanbo, the senior vice-president alliances for China Eastern. The transit volume will double to 20,000 in 2015, he added.

All four carriers belong to the SkyTeam Alliance, one of the big three global airline alliances. Their co-operation is seen as a threat to Cathay Pacific, which partners with British Airways in Oneworld, as transiting passengers to and from Taiwan is a major source of revenue.

The four carriers from SkyTeam on Thursday announced a joint frequent-flyer programme and airport lounge sharing arrangement for cross-strait flights. They will account for half of the capacity of the high-yield routes between the mainland and Taiwan by offering more than 270 round-trip flights per week. They also operate 280 round trip cross-strait flights through Hong Kong. Cross-strait services are lucrative as the demand for direct flights outstrips the capacity, which is still controlled by the governments from both sides.

"A marketing arrangement is the lowest form of co-operation," said Will Horton, analyst at CAPA, a Sydney-based airline consultant. "Greater value would come from more extensive code shares and perhaps, one day in the future, revenue sharing."

China Airlines and China Eastern have been pressing hard to form closer ties within the mainland's carriers for more than a year while China Southern is less enthusiastic as its interest in cross-strait traffic is not as great as the other two, a China Southern insider said.

China Airlines would like to tap the massive mainland market through the partnership, while China Eastern wants more international passengers flying via Shanghai to Taiwan. China Southern, however, which flies from Guangzhou and other secondary cities to Taiwan, is less interested in forming the interlining agreement.

"What we can get from the Taiwanese market is far less than what they can get from the mainland market via the interlining agreement," a source close to China Southern said.