Air China finally expands Australia network after several years of market share declines

Air China is accelerating expansion in Australia as it launches flights on 11-Dec-2017 from Brisbane to Beijing.

Brisbane will be served with four weekly flights and will become Air China’s third destination in Australia after Melbourne and Sydney. Air China currently operates 11 weekly flights to Sydney and seven weekly flights to Melbourne. Air China uses a mix of A330-200s and A330-300s to Sydney and Melbourne; Brisbane will initially be served with two class A330-200s, featuring flat bed seats in business.

The current Sydney schedule consists of five weekly flights from Beijing, three from Shanghai and three from Chengdu. The current Melbourne schedule consists of four weekly flights from Shanghai and three from Beijing.

This summer Air China will offer a record 29 weekly frequencies to Australia during the peak months. This includes seven weekly flights on Beijing-Melbourne and Beijing-Sydney; four frequencies on Shanghai-Melbourne, Shanghai-Sydney and Beijing-Brisbane; and three frequencies on Chengdu-Sydney.

The last two summers Air China operated 25 weekly frequencies to Australia during the peak months.

Air China’s Australia capacity has grown relatively modestly since 2010. Air China carried 365,000 passengers to and from Australia in 2016. This represented 14% growth over 2015 but only 40% growth compared to 2010 and 23% growth compared to 2013.

Air China seats per week to Australia: Sep-2011 to Mar-2018

Source: CAPA – Centre for Aviation and OAG

In comparison, China Southern quadrupled its Australia passenger traffic from 2010 to 2016. In 2010, China Southern overtook both Air China and China Eastern to become the largest airline in the Australia-China market and has since pursued rapid expansion, enabling it to keep up with a rapidly growing market.  

See related report: China Southern celebrates 20 years in Australia with more capacity expansion

Meanwhile, Air China has steadily lost market share. In 2009, Air China was the largest airline in the Australia-China market and accounted for a 34% share of total nonstop passengers (based on BITRE data). In 2016, Air China accounted for only a 15% share.

Back in 2009, Air China was one of just four nonstop competitors in the Australia-China market along with China Eastern, China Southern and Qantas. There are now nine nonstop competitors, including Beijing Capital Airlines, Hainan Airlines, Jetstar Airways, Sichuan Airlines and Xiamen Airlines.

China Eastern is the second largest airline in the Australia-China market and carried 569,000 passengers in 2016. China Eastern currently operates 36 weekly frequencies to Australia compared to the 18 weekly flights for Air China and 48 weekly flights for China Southern. Qantas has 16 weekly flights in the Australia-China market and all the other competitors have 10 or fewer flights.

Air China has not grown in the core Beijing-Sydney market for several years, maintaining its current schedule of five weekly flights in winter and seven weekly flights in summer. Air China will again offer seven weekly flights this summer on the Beijing-Sydney route, which Qantas launched in Jan-2017 and now serves daily.

Air China is the only nonstop competitor on the Beijing-Melbourne route but for the last two years has maintained a relatively modest schedule of three weekly flights in winter and seven weekly flights in summer. Air China cut back on the Shanghai-Melbourne route from five to four weekly frequencies in mid-2016.

Air China decreased Shanghai-Sydney from four to three weekly flights in mid-2014 but is adding back the fourth Shanghai-Sydney frequency at the end of Oct-2017. China Eastern serves Shanghai-Sydney with 10 to 14 weekly flights (14 in the peak summer) and Qantas with nine weekly flights. China Eastern also offers 10 to 14 on Shanghai-Melbourne.

Chengdu was launched in in Nov-2016 and has since been served with three weekly flights, occasionally reducing to two weekly frequencies. The launch of Chengdu has driven an increase in Air China traffic over the last year. However, once again Air China has not been able to keep up with the rate of growth in the overall Australia-China market.

Chinese visitor numbers to Australia more than tripled from 366,000 in 2009 to 1.199 million in 2016 and were up another 11% in the first seven months of 2017. Air China’s Australia passenger traffic growth was less than 60% from 2009 to 2016.

With the new Brisbane route, Air China is finally starting to catch up. Brisbane has been served by China Southern since 2010 and by China Eastern since early 2016. Hainan Airlines became the third Chinese airline with service to Brisbane on 20-Sep-2017.

Queensland has emerged as a popular destination for Chinese tourists. Air China is now positioned to tap into fast growing demand for China-Queensland travel. However, Air China will need to launch more destinations and routes to Australia in order to avoid further market share declines.