Air China

China airlines in deadlock over A380s

Control of two jets on Paris route is sticking point in Air China-China Southern talks

PUBLISHED : Thursday, 28 March, 2013, 12:00am
UPDATED : Thursday, 28 March, 2013, 6:31am

Talks between two state-owned carriers, Air China and China Southern Airlines, over operating Airbus A380s from Beijing seem to have reached a deadlock.

Air China has been looking to lease two A380s equipped with cabin crew from China Southern, the only mainland airline to have bought such aircraft. The Beijing-based airline has said it would like to run the jets on the Beijing-Paris route and would allow China Southern to jointly operate the segment once it is up and running.

"The rationale is to avoid competition and create a win-win situation," Air China chairman Wang Changshun said. The Civil Aviation Administration of China and the alliances to which the two airlines belonged had approved the proposal, he added.

Such an arrangement would mean China Southern would either surrender the commercial control of the two planes, at least in the beginning, or forgo flying A380s on international routes from Beijing.

"We can't accept wet-leasing A380s to Air China," said Xu Jiebo, a director of China Southern. "We have a contingency plan if the talks collapse."

Xu said he expected the talks to be concluded in two months. Besides Paris, the Guangzhou-based airline wants to fly A380s to New York and other destinations in the United States from Beijing.

As the talks have been dragging on, China Southern has only been able to deploy A380s on one international route, Guangzhou to Los Angeles, from October - nearly a year after it took delivery of the first plane. Other than that, it plies its fleet of five A380s on the Beijing-Guangzhou route.

Although analysts say flying A380s on short routes are a waste of money, China Southern said the services were profitable on some months, with load factor averaging 80 per cent.

"We are confident of operating the plane on our own but we are still interested in co-operating with Air China if it helps us," said Tan Wangeng, the vice-chairman and chief executive of China Southern.

Separately, China Eastern Airlines said it needed to delay the launch of Jetstar Hong Kong, a low-cost carrier it jointly owned with Jetstar Group, by nearly six months to the end of the year due to "unexpected complexity" in its application for an operating licence in the city.

The airline would start with two A320s instead of three as it had originally planned, said Ma Xulun, the vice-chairman and chief executive of China Eastern.