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Which Chinese airline will Virgin Australia pick?

By John Walton     Filed under: cathay pacific, Hong Kong, China, hainan airlines, china southern, China Eastern, John Borghetti, Guangzhou, game change, Virgin Australia, #newvirgin

In our continuing series on the potential partner airlines Virgin Australia has its eye on, Australian Business Traveller is turning its attention towards China.

Virgin Australia CEO John Borghetti wants to have further spokes in the airline's network, which already includes US airline Delta, Aerolineas Argentinas, Etihad from Abu Dhabi and Air New Zealand across the Tasman. 

Borghetti explained when and where he's planning to link up in a telephone conference call with Australian Business Traveller. "I mean all of Asia", he said, and nixed a suggestion he was looking for only one airline.

"It could be one, or two, or three, or four," he continued. "The important thing is that we have a strategy that works for us in the long term. It will be a complete strategy."

But the market everyone's watching -- especially Qantas -- is China.

And with Skywest's new routes to Australia's lucrative resource areas, which send much of their output to China, there's clearly a niche for easy and comfortable connections for Australian -- and Chinese -- business travellers. 

There are few large airlines unaffiliated with global airline alliances in China, and a surprising (and unusual) level of SkyTeam membership among them.  So the significance of a Chinese partner in predicting future airline alliance membership for Virgin Australia is less than, say, in Southeast Asia.

Last week, we looked at the Southeast Asian airline partner options for Indonesia, Malaysia, Singapore and Thailand.

But who are the Chinese airlines Virgin Australia is looking at -- and what would a partnership with each mean for business travellers?

China Southern

China Southern is the largest airline in Asia and the main airline at southern Chinese hub Guangzhou. 

Within an hour's driving distance of Hong Kong and geographically convenient for connections to the rest of China, Korea and Japan, Guangzhou is an ideal hub location between China and Australia and the second busiest airport in China.

China Southern already flies from Brisbane, Melbourne and Sydney to Guangzhou -- as well as from Auckland, which could potentially be a useful link to Virgin Australia's ex-Pacific Blue and Polynesian Blue services, plus Air New Zealand domestic and Pacific Islands flights.

Since China Southern is an existing member of the SkyTeam alliance, a particularly strong tie-up with the airline (in combination with Virgin Australia's existing partnership with US airline Delta, a core member of SkyTeam) could signify Virgin Australia's intentions were SkyTeam-bound. 

China Eastern

Headquartered in Shanghai, China Eastern is the second largest airline in the People's Republic. China Eastern flies from Melbourne and Sydney to Shanghai Pudong airport year-round, and seasonally from Brisbane.

Unfortunately for its near-term future as a hub airline, its Shanghai base is split over two airports, Hongqiao and Pudong. Most international flights arrive in Pudong, but most domestic flights use Hongqiao. And there's no really convenient way between the two. 

Plus, Shanghai isn't really a convenient connection point for southern and Western China, especially when considering options like Guangzhou and Hong Kong. Why fly northeast just to fly southwest again?

The airline plans to join SkyTeam this year, so if Virgin Australia waits until after that move has gone through, China Eastern could be another SkyTeam hint.

Hainan Airlines

Hainan is a smaller player in China -- but only by Chinese standards. The airline, the largest of China's few privately-owned airlines, is only 30 planes smaller than Qantas, with an impressive domestic Chinese focus.

The airline has less of a hub-and-spoke model than most Chinese airlines, which makes it a less attractive option than, say, China Southern's mega-hub at Guangzhou.

Hainan currently has thrice-weekly flights from Sydney to Shenzhen, which continue on to Hangzhou. Shenzhen, just across the river from Hong Kong, is a very useful location for a hub, with geographically convenient connections to most larger Chinese cities. 

Subsidiary Hong Kong Airlines -- unsurprisingly based at Hong Kong Airport -- could also contribute to a partnership agreement, with its complementary Chinese and Asian network.

Cathay Pacific

Cathay would probably be the most surprising choice. A oneworld partner of Virgin Australia's rival Qantas, Cathay would have some serious explaining to do if it agreed to join up with Virgin Australia.

Its Hong Kong-based hub network is attractively convenient, though -- and is also outside the PRC's immigration and customs zone, making connections less of a hassle. Subsidiary Dragonair and its matching network into China only sweetens the deal.

But oneworld's the sticking point, with Qantas already funnelling Australian passengers into Cathay's Hong Kong network. 

Which Chinese airline do you think would be the best fit? Which has the best service -- and the best hub?

Share your thoughts with our readers in a comment below, or tweet us: @AusBT.

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About John Walton

Aviation journalist and travel columnist John took his first long-haul flight when he was eight weeks old and hasn't looked back since. Well, except when facing rearwards in business class.

 

Have something to say? Post a comment now!

1 on 16/5/11 by ianmeyer

Have we forgotten Air China, the flag carrier? Major *A player out of PEK... great connections through asia, and a great domestic network... Flights to PEK and PVG from most Australian ports.

1 on 16/5/11 by John

Nope, this former Beijingren has many a fond memory of Zhongguo Guoji Hangkong Gongsi!

But PEK is an even more unlikely connection option from Australia than Shanghai, so it fell off even the "also rans" list. And the Star Alliance link puts the nail in the coffin.

I'll buy you a beer if you prove me wrong in the end, though...

2 on 16/5/11 by am

The problem is that it could really be anyone, especially in China...

I do agree that an airline with a massive hub would work better for VA though, especially if there are already flights from Australia with the new partner airline that VA could compliment with additional services...

1 on 16/5/11 by John

Well, that's absolutely their South American strategy with Aerolineas Argentinas.

The 777s can't fly to South America without encountering the twin-engined ETOPS restrictions for being too far apart from a diversion airport -- the same ones that scotched the Jo'burg flights.

So AeroArg flies the route across the Pacific and Virgin is a feeder. 

Virgin Australia doesn't really have enough 777s on order for the near future to be able to use them as trunk-line aircraft, so the only real option for home flights is more (entirely hypothetical) A330s, probably with yet another business product, or the 777 product, because the current A330 product doesn't really cut it for long-distance.

Of course, the really revolutionary idea would be to use a 737 fleet to China from a Darwin hub. 737-800s could comfortably reach a good part of China (not quite to Beijing, but definitely Shanghai and Guangzhou-Hong Kong). Not gonna happen, but an interesting idea...

3 on 16/5/11 by whoknows

Don't forget EVA Airways from Taiwan, Republic of China!

1 on 16/5/11 by John

I'm planning to address airlines with Taiwan hubs in a later post along with other east Asian airlines, because of the specific "international" status they have in China when it comes to immigration and customs. They don't really (IMO) have an advantage over non-PRC airlines (which is also why Cathay fell out of the top rankings).

4 on 18/5/11 by Gunners

China Southern is and China Eastern will be in Skyteam.  Air China is in *A. Hainan is not alligned.  Delta is in Skyteam whilst Air NZ is  in *A.

I think VA will continue to seek bi-laterial (codeshare) alliances rather than joining a intermational alliance.  This strategy allows VA to cherry pick partners to suite.

I believe it will be hard for VA to join *A given the situation with Tiger. It is also diffcult for a domestic airline to be part of a global alliance when it comes to FFP.  For instance  the SIA *A FFP accrual table and the Air France Flying Blue accrual table seriously discounts or do not allow earning FFP on domestic flights through partner airlines.

The situation with VA is similar to that of Jet Airways in India, also being a primarily domestic carrier with some international routes.   Though given the recent Jet Alliances I expect Jet to run with Skyteam.

My bet is that VA will decide on Malaysian Airlines (possibly Korean Air) and China Southern as their Asian partners.   It will be interesting to see how the FFP works out for VA under these alliances.

1 on 18/5/11 by am

Having an airline that has a large regional network and little in the way of long haul/international can work very well... If VA were to join Star, which already has massive presence into and out of Australia, then it would provide extensive feed to more regional destinations, as well as providing domestic/South Pacific flights for Star partners to sell... The unique nature of VA means that it wouldn't step on too many members toes and major money making routes (except United to LAX and maybe some of the Kangaroo traffic if they were to stay with EY for that)... I can see it working brilliantly, with flights coming in from Asia, the US and Europe on Star carriers connecting to VA at key hubs (Perth and Sydney?)...

VA could then plug the gaps - maybe flights to Japan, South America etc in addition to their current flights to the USA??

5 on 18/5/11 by Gunners

Guangzhou Airport could do with a Virgin style lounge.  

 

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