The Week in Focus: The growing pains of China Southern

The Week in Focus: The growing pains of China Southern
By admin

Three years ago, China Southern Airlines outlined its vision to Tourism Australia chief executive Andrew McEvoy. That vision included operating to seven Australian ports and, by the end of the decade, carrying one million Chinese travellers to Australia.

“I thought that was amazing, but maybe too good to be true,” McEvoy now says. “But the airline has done or is doing everything they said they would. I quickly became a believer.”

China Southern this week announced the fifth of those seven ports with Cairns now featuring on its routemap with a seasonal, three times weekly service to operate via Brisbane from December.

Tan Wangeng, the airline’s amenable president and chief executive, who is highly regarded in the Chinese political hierarchy, flagged Adelaide as the 6th port but remained coy on the 7th. However, Canberra has appeared on powerpoint presentations in the past.

With around 40 weekly flights operating each week to Australia, and with plans to increase that to 55 by the end of 2015, China Southern is now moving to the next stage of its growth – partnerships.

During a press conference with Australian media in Guangzhou this week, Wangeng issued an open invitation to Qantas and Virgin Australia to come and talk to China Southern.

Such a partnership could work both ways. With such capacity growth, China Southern will be anxious to tap into Australia’s domestic network. Or as one industry observer told me: “They’re going to have to partner like crazy”.

For an Australian airline, an agreement will give it direct access into China, which, of course, is where the world and his wife wants to be.

China Southern is still heavily reliant on its own citizens, with foreign nationals making up only around a quarter of its passengers, meaning access to Australian regions beyond its gateway ports will be crucial.

With Qantas already involved with China Eastern, Virgin Australia would seem the most likely partner for China Southern, with Virgin chief executive John Borghetti said to be open to the idea. That, however, could tread on the toes of Virgin’s Asia partner, Singapore Airlines. It will be fascinating to see how airline partnerships evolve in Asia, with Qantas possibly shedding some light on that next week when it delivers its 2012 financial results.

But it’s not just airline partnerships that China Southern needs. As important, if not more so, is its relationship with the retail trade in Australia. Tan spoke of his “friendship” with Flight Centre management and he’ll need all the friends he can get if his plans to develop the Canton Route are to truly come off.

There is an argument to say China Southern has expanded too quickly. For while the number of flights has risen, the service quality remains questionable.

Cabin crew are eager to please and eager to learn and by all accounts the service has improved markedly over the past three years. But right now, the quality is not at the level required for an airline which is so keen to make its mark on the world stage. Flight attendants' English is adequate – although light years better than my non-existent Mandarin – but possibly frustrating for many passengers.

Yes, there is a price point that will entice some travellers to choose the Canton Route, but with strong competition both through Asia and the Middle East, grabbing a meaningful slice of that pie will be a tough challenge.

Business class product may also need to be stepped up, first and foremost the advent of fully lie-flat beds, which are now the norm in premium class cabins. Inflight entertainment should also be on the revamp list.

The positive is that management are well aware of the failings and only too anxious to admit it needs to learn. Executive vice president He Zonkai even thanked Australians for their letters of complaint as they provide insights into where it needs to improve.

The introduction of Australian cabin crew – 24 have been trained to far – will also go some way to bridging the gap between what is expected and what is currently offered by China Southern.

Irrespective of China Southern’s challenges and opportunities, such expansion and ambition can only bode well for Tourism Australia. With China Eastern also set for growth, Andrew McEvoy is well placed to deliver on his 2020 China promise.

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