More Latest Travel News

  

China Southern Airlines President Addresses IATA Confab

7 June 2002

Mr. Wang Changshun, President, China Southern Airlines (NYSE: ZNH) (HKSE: 1055), the largest airline in The People's Republic of China was a featured speaker at the 2002 World Air Transport Summit and IATA's 58th Annual General Meeting.

Here are some highlights of Mr. Wang's presentation: 

"As the largest airline in China, we at China Southern Airlines are pleased to see that, since its establishment more than 50 years ago, IATA has made extraordinary contributions to the world aviation industry and its commitment to safe and on-time flight operations. By the close of the 20th Century, the world aviation industry carried more than 1.6 Billion passengers and more than 29 Million tons of goods annually, among which cargo carried accounted for 40% of the world's total exports, resulting in an annual income of USD$1.35 Trillion. 

With the consistent increase in its economic returns, the international aviation industry has also enhanced the global economy and the rapid development of world trade and the unalterable process of economic globalization.

Like its counterparts throughout the world, China's aviation industry has also made significant progress in the past decade. Passengers and goods carried increased by an annual average rate of more than 16% and total traffic by more than 18% … both exceeding China's GDP growth from between 6 and 8 percentage."

Mr. Wang explained that, "total traffic for China's domestic flights in Year 2000 (except for Hong Kong, Macao and Taiwan) was only 9% of the United States and 1/2 of Japan. The average annual frequency for Chinese citizens to travel via commercial aircraft is of a mere 0.1%. And the total traffic for China's aviation industry constitutes only 3% of the world's total. This is due in part to the relative infancy that China's aviation industry finds itself. But there is enormous potential for further development with numerous opportunities and challenges."

According to Mr. Wang, "Compared with 1995, China Southern Airlines' total assets doubled in 2001, amounting to 30.6 Billion Yuan. Cargo transportation grew by 1.85 fold, reaching 3.03 Billion tons per kilometer. Passengers carried increased by 26%, totaling 19.12 Million. The number of operating aircraft in the China Southern Airlines' fleet also increased from 82 to 111." 

He added, "as China's largest airline, China Southern Airlines currently controls approximately 25% of the domestic passenger and cargo aviation market share. In light of the new economic environment of China's entry into the World Trade Organization - and in particular the fierce battle for market share in China's domestic and International aviation market - China Southern Airlines has "raised the bar" … setting obtainable goals to position itself as the strongest airline in China." 

Mr. Wang said that the "key to attain this goal is to implement our airline's strategy of embracing the economies of scale".

He explained that, "since the reform and opening of China in the early 1980's, China's civil aviation industry has seen expeditious growth. But problems have emerged - or most have noted the nation's increasing number of smaller airlines which are saddled with high operational costs. This disordered competition has substantially undermined the profitability of all the airlines, resulting in deterioration of services and lack of positive momentum.

In recent years, the Civil Aviation Administration of China (CAAC) has adopted a series of proactive policies to regulate competition within the industry and helped to promote the consolidation and restructuring of the industry on the basis of in-depth institutional reforms." 

Mr. Wang said that, "the development of China Southern Airlines over the past years has, to some extent, reflected the advantages of economies of scale. In 1998, China Southern Airlines purchased the former Guizhou Airlines, converting it into an aviation base in Southwest China. In Year 2000, a merger with ZhongYuan Airlines resulted in China Southern seeing its market share in Zhengzhou, capital of Henan Province jump to more than 64%." 

In that same year, Mr. Wang said, China Southern Airlines began churning a profit. Last year, the airlines directly under the direction of the CAAC began to consolidate and restructure under the principle of "According to enterprises' own will, under the government's guidance and giving full play to the conglomerate's advantages". After restructuring is complete, three major conglomerates will emerge: Air China, China Eastern Airlines and China Southern Airlines." 

He said that, "China Southern Airlines will merge with China Northern Airlines and Xinjiang Airlines to form the New China Southern Airlines Group. We have already completed the assessment of assets and submitted our merger program to the CAAC for its approval. In order to promote reform and restructuring, we have also given priority to the integration of the market, including the readjustment of our route networks, the coordination of operational management and revenue sharing. "

It is estimated that, after restructuring, China Southern Airlines will have a fleet of 180 airplanes and operate more than 600 routes with total assets exceeding 50 Billion Yuan.

The new China Southern Airlines will not only be the largest airline in China with more than 40% of the domestic market share but will be one of the largest airlines in Asia.

Mr. Wang concluded his address by stating that, "we can foresee that restructuring will aid China's aviation industry in meeting the new challenges of a post-WTO market environment. This CAAC restructuring will help regulate the aviation market, reduce operational costs, concentrate marketing efforts on major routes, further segment the market and improve China's domestic route network so that the airlines can provide better transportation services to its cargo and passenger customers. 

In addition, restructuring will also lay a solid foundation for China's airlines to extend their regional and International routes and strengthen multilateral code-share cooperation with other airlines around the world.

In spite of its remarkable achievements, there is still room for China Southern Airlines to improve itself. The enormous potential of China's aviation market has presented us with a remarkable opportunity for the future."

The largest airline in The People's Republic of China for the past 22 years, China Southern Airlines connects more than 80 cities around the globe. Major business and vacation destinations served in China include: Beijing, Chengdu, Guangzhou, Guilin, Hong Kong, Kunming, Shanghai, Shenzhen and Wuhan and as well as international service, including: Amsterdam, Bangkok, Fukuoka, Hanoi, Ho Chi Minh City, Kuala Lumpur, Jakarta, Los Angeles, Manila, Melbourne, Osaka, Penang, Phnom Penh, Seoul, Singapore, Sydney and Tokyo.

Subscribe to our Travel Industry News RSS Feed Travel Industry News RSS Feed from TravelNewsAsia.com. To do that in Outlook, right-click the RSS Feeds folder, select Add a New RSS Feed, enter the URL of our RSS Feed which is: https://www.travelnewsasia.com/travelnews.xml and click Add. The feed can also be used to add the headlines to your website or channel via a customisable applet. Have questions? Please read our Travel News FAQ. Thank you.
     
 
Copyright © 1997-2024 TravelNewsAsia.com