A VALUABLE PARTNERSHIP
Delta Air Lines eager to bolster collaboration with China Eastern Airlines to expand its presence in the world’s fastest growing aviation market
Delta Air Lines may have increased its capacity seven times in China over the past eight years, but its greatest achievement to date is actually building a partnership with Shanghai-based China Eastern Airlines, said Steve Sear, president of international at Delta Air Lines.
Sear explained that Delta’s partnership with China Eastern has enabled the two airlines to grow together in terms of revenue and number of routes as well as boost customer experiences. Working together has also provided the US company with insights into how airports in China are developing.
Sear added that Delta is confident of the new route it plans to launch between Shanghai and Atlanta in July 2018, saying the US company will benefit from China Eastern’s loyal customers.
In late July, China Eastern Air Holding Co and Delta Air Lines announced that they would each buy a 10 percent stake in Air France-KLM Group for about 375 million euros ($450 million).
The new collaboration is expected to further enhance the partnership between the three airlines. Delta Air Lines in 2015 acquired a 3.55 percent stake in China Eastern.
“Our goal is to have the best China partner in the largest and fastest growing market in the world, the best partners in Europe covering four of the top five markets, Virgin Atlantic, Air France-KLM and Alitalia, and the best US carrier, Delta Air Lines. We like this global coverage and we want to further deepen those partnerships,” said Sear.
According to Sear, China is the fastest growing aviation market in the world and is regarded as the cornerstone of the Atlanta-based company’s growth strategy. Delta maintained a double-digit growth last year and the China market is expected to be its largest revenue contributor in the AsiaPacific region.
In 2009, Delta’s daily capacity in China was a mere 265 seats. Today, the company’s capacity has expanded to 1,600 as flights between China the United States become among the most profitable routes in global aviation. In fact, the number of Sino-US routes increased 180 percent between 2010 and 2016, according to the Guangzhou Daily.
Direct flight passengers, who make up the core of aviation travelers between China and the US, soared from 4.68 million in 2014 to 6.43 million last year, according to industrial analyst Li Yanwei. As of 2016, there were 13 Chinese airports operating 63 routes to the United States. Shanghai Pudong International Airport and Beijing Capital International Airport dominated the market by operating flights to 17 and 15 US airports respectively.
Three years ago, tickets bought in China made up 30 percent of the traffic between the US and China. According to Sear, this figure would be reversed by 2020 when China is expected to account for 70 percent of the traffic between the two countries.
“In fact, it is expected that Shanghai will overtake London as the number one market between the US and any international destination by 2020,” said Sear.
Yu Nan, an industrial analyst at Haitong Securities, said such a projection is based on the fast-growing Sino-US tourism market. Some of the factors behind the growth is the continuously expanding trade volume between the world’s largest economies, the 10-year visa policy for Chinese people visiting the US, and the greater number of Chinese going to the US to study.
This rapid growth can be seen in Shanghai as well. Sear said the city has dramatically changed since he first visited it 12 years ago.
“When I look at the second tallest building in the world (Shanghai Tower), it is a reminder of the amount of growth that’s here, and Shanghai is still growing at an incredible rate. There’s an energy about the city that is very similar to the one in New York. And that’s what I like when I visit the city,” he said.
Our goal is to have the best China partner in the largest and fastest growing market in the world.” Steve Sear, president of international at Delta Air Lines
Steve Sear, president of international at Delta Air Lines.