Sichuan Airlines Grows Chongqing-Sydney Service
Sichuan Airlines Grows with Chengdu Chongqing-Sydney service, but European and American expansion awaits
Sichuan Airlines, China's fifth carrier to offer international long-haul services, will increase its presence in Australia with a new twice-weekly Chongqing-Sydney service launching 20-Dec-2013 with A330s. The route complements Sichuan's existing Chengdu-Melbourne service and will more easily allow passengers to visit Australia's two largest cities. Short connecting flights between Chengdu and Chongqing will complete the loop. The service will further expand the massive influx of Chinese capacity Australia has seen in recent years, including China Southern's A380 deployment to Sydney in Oct-2013.
Yet to be realised are Sichuan's bold plans to grow in Europe and North America. While the carrier's largest shareholder is the Sichuan government, all three of China's main airlines – Air China, China Eastern and China Southern – own a stake in Sichuan Airlines, complicating its aspirations. Slower growth may be wise: the Chengdu-Melbourne service in its first five months averaged only a 45% load factor. While China's secondary and western cities have geographical advantages for European services, for Australia it will be some time before they mature. This is not helped by the fact that Sichuan does not have an English
Chongqing-Sydney launches on 20-Dec-2013 with Chongqing government subsidy
Sichuan Airlines will launch twice-weekly A330 Chongqing-Sydney service on 20-Dec-2013. The route follows the carrier's first long-haul intercontinental flight, Chengdu-Shenyang-Vancouver and second route, Chengdu-Melbourne. Chengdu, the capital of Sichuan province, is Sichuan Airlines' largest hub. The second, with half the capacity of Chengdu, is Chongqing.
While it may seem odd to launch the Sydney route from Chongqing instead of Chengdu, the Chongqing government is subsidising the route to an unspecified sum. Chongqing is about 280km away from Chengdu and is a municipality that is not part of Sichuan province. So not only is there Chengdu-Chongqing rivalry at play, but China's secondary cities are racing to catch up to their more mature counterparts primarily along the coast: Beijing, Guangzhou and Shanghai.
There is a desire to emulate them, at the local level and national as China's central government has a "go west" campaign to economically develop the areas around Chengdu and Chongqing, and elsewhere. But these areas are still significantly younger than Beijing and Shanghai. Business demand is lower, as are salaries. The basic conditions for unsubsidised intercontinental routes from such cities is largely absent.
But long-haul routes and other signs of internationalisation are warmly welcomed by local officials who are ultimately trying to impress their superiors and are jockeying for a promotion, perhaps to over-simplify the matter. So such long-haul routes develop even though there are little economic gains to China as most spending occurs overseas.
Sichuan Airlines will benefit from having a second destination to sell in Australia. Air China and China Eastern serve two cities (Melbourne and Sydney while China Eastern suspended Cairns in Aug-2013) while China Southern serves four (Brisbane, Melbourne, Perth and Sydney). This allows Chinese passengers – who comprise the vast majority of the market – to visit multiple Australian destinations. There are, as of Oct-2013, no passenger flights between Chengdu and Chongqing given the short distance, but GDS filings indicate Sichuan Airlines will operate tag Chengdu-Chongqing flights on the A330 for the Sydney service.
