Posted On 2017/06/20 By In Airlines, China Domestic, News, China Outbound, Research With 134 Views

China needs 3,200 more Aircraft as Travel booms, says Avolon

Chinese airlines will need an additional 3,200 aircraft over the next 10 years as Chinese citizens travel more, according to Avolon, the international aircraft leasing company controlled by China’s conglomerate HNA Group. According to a research paper issued on Thursday, more than 50 per cent of the aircraft still need to be ordered, including 1,150 narrow-body aircraft, 400 wide-body aircraft and 150 regional jets.

China currently had 2,800 aircraft in its passenger service fleet, which accounted for 13 per cent of the world’s total and represented 11 per cent annual growth since 2010, the paper said. The fleet mix had a high narrow-body content, compared with the average for the rest of the world, and Chinese airlines were correspondingly underresourced in wide-body aircraft, it added.

“China offers an attractive long-term growth opportunity for domestic and international airlines, aircraft [original equipment manufacturers] and aircraft leasing companies,” said Dick Forsberg, Avolon’s head of strategy and author of the study. “Competition for airlines is likely to be intense as Chinese airlines focus on capturing their growth potential while being challenged by international carriers.”

Forsberg said there was also huge potential for original equipment manufacturers and lessors to capitalise on the under-ordered position in China, particularly in the wide-body segment. China’s answer to Airbus, Boeing completes Shanghai maiden flight

Rapid growth in outbound travel was the strongest factor fuelling demand for more flights and aircraft, the paper said. China became the world’s largest source of international outbound tourists in 2012, overtaking Germany and the United States, accounting for almost 10 per cent of global cross-border trips, according to the paper.

The China National Tourism Administration has projected outbound Chinese tourists will reach 200 million by 2020. Last year, the number was 122 million.

“This [2016] number represents less than 9 per cent of the total population and only 15 per cent of urban residents, suggesting that there is a great deal more growth … Those travellers spent US$110 billion, which makes the market an extremely attractive one for the destination countries,” the Avolon paper said.

Conversely, inbound international visitors accounted for only a fraction of Chinese tourists travelling abroad. The National Bureau of Statistics reported that 25 million international visitors arrived in China in 2015, a small decline over 2014, with the 10-year average growth since 2005 running at 2.5 per cent. The paper also pointed out that Chinese airlines were competitive when compared to foreign rivals.

By the competitive performance index, a benchmark that tracks market share, Chinese airlines achieved an average score of 1.02 in 2016, indicating that “Chinese airlines secure a slightly higher market share than their overseas competitors relative to the capacity offered”, the paper said.

“However, this is a decline from their rating in 2010, which was 1.05. This drop in competitive performance towards the average is partly explained by the changing mix of activity across the various regions, with Chinese airlines increasing their activity in more competitive markets.”


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Article: ECNS / Image: Pranav Bhatt

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About

Stefan

Stefan (from Austria, Europe) has been living, studying and working in China since 2010. Stefan has worked on several research, publication and consulting projects focusing on the China Travel Market. He holds two Masters degrees and is an expert on China Outbound Tourism, Marketing and Social Media in China. Stefan works with BMG on the Global Ready China Seminars as well as the Global Ready China News and related projects. He also has teaching engagements in the areas of eMarketing and Tourism Strategy.

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