Spring in the step for bud­get air­line car­rier

China Daily (Canada) - - BUSINESS - By WANG WEN wang­wen@chi­nadaily.com.cn

Spring Air­lines Co Ltd, the first low-cost car­rier in China, is con­tin­u­ing to ex­plore the in­ter­na­tional mar­ket with the aim that it will ac­count for 30 per­cent in its net­work of routes by the end of 2014.

The car­rier took off in 2005 and runs 15 in­ter­na­tional routes, mak­ing up 18 per­cent of its en­tire net­work by the end of 2013.

“North­east Asia, in­clud­ing Ja­pan and South Korea, and most South­east Asian coun­tries are all our tar­get mar­kets,” said Wang Zhenghua, chair­man of Spring Air­lines.

“The 15 mil­lion square kilo­me­ters around Shang­hai are all our tar­get re­gions, so long as our Air­bus 320 fleet can reach them,” he said.

Ja­pan is a main mar­ket for Spring Air­lines. Cur­rently, it runs three routes from Shang­hai to Ja­pan.

The car­rier’s branch com­pany in Ja­pan will start work in May. It will launch some do­mes­tic routes in Ja­pan then.

“The in­vest­ment into the branch is huge,” Wang said, be­cause they pay Ja­panese staff high salaries.

But the car­rier con­sid­ers it must do so as a key step to­ward its in­ter­na­tional strat­egy, he added.

If the branch com­pany proves suc­cess­ful in Ja­pan, the car­rier may un­der­take a sim­i­lar strat­egy to open more routes in other mar­kets, such as South­east Asian coun­tries.

Spring Air­lines, which was the only bud­get car­rier in China for a long time, has al­ready pro­posed launch­ing an ini­tial pub­lic of­fer­ing that may be on the list in 2014.

The car­rier’s av­er­age load fac­tor in 2012 was 95 per­cent, while the load fac­tor of the whole in­dus­try was more than 80 per­cent.

At the very be­gin­ning, about 80 per­cent of pas­sen­gers of the car­rier were tour groups from its par­ent com­pany, Shang­hai Spring In­ter­na­tional Travel Ser­vice Ltd, but the per­cent­age has fallen to no more than 15 per­cent, Wang said.

Af­ter de­vel­op­ing over the years, Spring Air­lines also has its own sta­ble group of cus­tomers.

“As many as 75 per­cent of our tick­et­buy­ers are from the younger age group be­low 30 years of age,” said Zhang Wu’an, spokesman for Spring Air­lines.

In or­der to lure young cus­tomers, Spring Air­lines is ac­tive on so­cial me­dia In­ter­net sites and uses in­no­va­tive mar­ket­ing tech­niques, such as blind-date flights.

The young pas­sen­gers are used to buy­ing tick­ets through mo­bile ter­mi­nals and of­fi­cial web­sites, which en­cour­ages the car­rier to add more di­rect sales, Zhang said. It is also a cost-sav­ing prac­tice.

China’s in­creas­ing in­di­vid­u­al­ized tourism pro­vides pas­sen­ger flows to the bud­get air­lines, as well.

China’s in­bound tourism num­ber was al­most 3 bil­lion per­son-trips in 2012. No more than 5 per­cent of them were part of tour groups, ac­cord­ing to a Chi­nese tourism re­port on va­ca­tions booked per­son­ally re­leased by China Tourism Academy.

“The per­cent­age of such trav­el­ers in China is al­ready close to that of de­vel­oped coun­tries,” said He Yong, deputy gen­eral man­ager of Ctrip In­ter­na­tional’s tourism depart­ment.

The price of air tick­ets from Spring Air­lines is usu­ally 42 to 45 per­cent lower than the av­er­age price on the mar­ket. It is at­trac­tive for trav­el­ers with lim­ited bud­gets who want to de­ter­mine the scope of their hol­i­day per­son­ally.

The car­rier is well-known for its se­ries of tick­ets priced 9, 99 and 199 yuan re­spec­tively. It pro­vides 20 to 30 per­cent of the tick­ets with spe­cial dis­counts on ev­ery flight, Zhang said.

“Al­though we pro­vide many dis­counts, Spring Air­lines still man­ages to main­tain a profit through sav­ing costs and in­creas­ing in­come,” he said, with­out spec­i­fy­ing de­tails.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.