New | Spring Airlines' billionaire-on-a-budget is prepared to spend more on Japan
The frugal founder and president of Spring Airlines believes firmly in the untapped market potential for air travel between China, Japan and Korea
Wang Zhenghua, 71, who emerged as China's newest aviation billionaire after his Spring Airlines floated in January, is a notoriously frugal man.
The founder, president and quarter owner of what is now Asia's biggest budget carrier by market value, Wang still chooses to live on a budget himself. In the hallway leading to his office that is less than 10 square metres, only the first and the last of the six lights were turned on. "Cost saving is any time," he said proudly.
Wang, known for travelling with his rice cooker and instant noodles, is no stranger to no-frills. The airline he created 10 years ago - initially for charter services for his travel agency business - on Thursday posted net profit of 254 million yuan (HK$322 million) for the first quarter of this year, up 46.4 per cent year on year.
Wang said he did not expect Spring's share price to soar by six times over the past three months as analysts rushed to endorse the airline's unique business model in which Spring Tour International, the travel agency associate, feeds a steady traffic flow.
The immense potential of China's low-cost travel market has also led analysts to forecast Spring Airlines' net profit to at least double by the end of next year from 884 million yuan last year.
With a net margin of 20.8 per cent reported for last year, not only does Spring outshine all legacy carriers in Asia on razor-thin margins, its return on equity of 28.1 per cent is almost twice as high as the figures at low-cost giants Southwest Airlines in the US and Ryanair in Europe.