As Chinese aviation market continues to expand, so do the airlines. Although we haven’t seen mega orders from Chinese carriers along the lines of the Indian budget carriers, they have been continually expanding. The most recent expansion plan comes by way of China Southern. The airline placed an order with Boeing to add to its short haul and long haul fleet.
The airline placed an order for 38 aircraft, 8 777-300ER and 30 737MAX8. The airline plans to start refreshing its short haul route network with the 737s and continue to expand internationally with the 77W. The list price for the order is around $5.65 billion, but the airline will probably see a deep discount. The airlines 77W are fitted with a 4 class interior. It has 4 First class suites, 34 business class seats, 44 premium economy seats and 227 economy seats.
China Southern International Expansion
The airline is planning to expand very aggressively. They have 55 long haul aircraft on order: 7 A330s, 8 77Ws, 20 A350s and 20 787-9s. The airline will begin to add destinations across the world, given that it is the Chinese airline with the least international destinations. China Southern will have issues with expansion given the Chinese aviation principle that only allows one Chinese carrier per international route. Although there have been rumors that this rule will be changed, it still stands. I suspect that CZ will try to focus on lesser cities (similar to what Hainan has been doing) and create a super-hub at Guangzhou and other Chinese cities. This would be a very effective strategy, given how the airline controls its hub at Guangzhou.
Domestic Fleet Renewal
China Southern is also looking to renew its domestic fleet. They are returning their 757s and 777-200s back to Boeing, and are adding newer Airbus and Boeing narrowbodies. The airline is dumping its older A319s in favor of 64 newer A320neos. The airline (in addition to the 30 MAXs ordered) has 20 737MAX on order. This renewal/expansion goes hand in hand with China’s aviation expansion.
As China Southern continues to solidify its position in the world, fleet expansion is only natural. The airline’s partnership with American Airlines will offer it extended access to the US market, as well as to some international destinations in the Americas. The airlines plan on starting a limited codeshare agreement, that will certainly expand as time goes on. I expect China Southern will also forge more partnerships with other oneWorld carriers, and launch flights that will coordinate with them. This is a major win for China Southern, and a loss for Skyteam. However, Skyteam still has China Eastern, which is another major airline in China. Regardless, Chinese airlines will continue to expand, and Chinese authorities should open up flights to competition and provide better competition for consumers.
What do you think? What new destinations will China Southern launch with the acquisition of these new aircraft? Let us know!
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