China Southern's A380 Takes off, Testing Water in Domestic Market

October 18, China Southern Airlines Ltd. launched the commercial operation of China’s first Airbus 380 superjumbo on Tuesday, flying passengers between Beijing and Guangzhou and testing the water for A380 aircraft in the domestic market.

Guangzhou-based China Southern, China’s largest carrier by fleet size and the world’s seventh operator of the double-deck plane, will fly passengers between Beijing and Guangzhou until Oct. 26 and later between Shanghai and Beijing from Oct. 27 to 29.

The 506-seat aircraft is the first out of 5 to be delivered by Airbus president and chief executive Tom Enders to China Southern chairman Si Xianmin. It has 8 luxury first-class suites, 70 flat-bed business-class seats and 428 economy-class seats.

A one-way luxury first-class ticket costs RMB 4,760 between the 3 domestic cities, and the price of a business-class seat and economy-class seat is RMB 3,910 and RMB 1,700 for the same routes, respectively.

Profit Outlook

The A380 superjumbos entered service in 2007. So far a total of 57 A380 planes have been delivered, transporting some 16 million passengers on 41 routes between 25 destinations, according to Toulouse, France-based Airbus.

China Southern views the brand-new aircraft as an opportunity to capture growth in the Chinese aviation market, but for Airbus, operation of the first delivery will mainly help it test the water in China before it’s able to snap up market share from its biggest rival Boeing.

Boeing currently has more than 800 orders for its 787s globally, while Airbus’s A380 has received around 236 orders. Industry analysts believe China Southern’s operation of the country’s first A380 plane will be a critical element for A380s in the Chinese market.

The second delivery is expected to be made later in December and before that, the plane will serve domestic routes, according to Si, the chairman.

Si revealed that by the time the third and fourth A380 planes are delivered by 2012, more A380 planes would be used for international routes, which China Southern plans to expand in the next few years.

“We have limited amounts of international routes for the moment, but starting last year, China Southern has been focusing on expanding the routes, and our purchase and operation of this A380 and more aircraft is a major step forward in our global expansion,” an unnamed company insider was quoted as saying by the China Business News.

China Eastern

Shanghai-based China Eastern Airlines Corp. Ltd. has dropped an order for 24 Boeing 787 Dreamliners, and will instead pick up 45 smaller 737s, Bloomberg reported on Tuesday.

China Eastern made the decision because of massive delays in the delivery of the U.S. firm’s flagship superjumbo and slowing global economic growth, which could hurt demand for international air travel.

“Airlines worldwide are adjusting their fleet expansion strategies as the weakening global economy hurts air travel,” Luo Zhuping, China Eastern’s board secretary, told Bloomberg. “We are making swift moves to serve domestic demand that is still robust at the moment.”

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