Competitive Dynamics of the China-Europe Aviation Market Dr Zheng Lei Institute for Aviation Research (UK)
Agenda Overview of the China-Europe Aviation Market Analysis of the Connecting Market Main players in the China-Europe Aviation Market
Overview of the China-Europe Aviation Market
万座位数 Developments of monthly frequency and monthly seats in the China-EU market 3000 2500 2000 1500 1000 500 100% 80% 60% 40% Rapid Growing Market: Dynamics and Opportunities Monthly Frequency 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 CN 中国承运人 EU 欧洲承运人 Monthly Frequency 100% 80% 60% 40% Monthly Seats 80 70 60 50 40 30 20 10 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 CN 中国承运人 EU 欧洲承运人 Monthly Seats 月座位数比例 20% 20% 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 CN 中国承运人 EU 欧洲承运人 Note: routes with monthly frequency >=8 Source: IAR anlysis based on OAG database (July, each year) 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 CN 中国承运人 EU 欧洲承运人
Major Changes started from 2014 Number of Routes Connecting China-Europe 69 76 59 30 35 30 34 40 45 47 50 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Note: routes with monthly frequency >=8 Source: IAR anlysis based on OAG database (July, each year)
New Routes Driven by Chinese Carriers Number of Routes Operating by China or EU Carriers 50 59 28 24 18 19 17 26 26 23 24 26 21 32 32 29 31 32 38 35 37 37 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 by CN Carriers by EU Carriers Note: routes with monthly frequency >=8 Source: IAR anlysis based on OAG database (July, each year)
China-Europe Routes operated by Chinese Airlines in 2014: 32 Routes Origins: Beijing (17), Shanghai (7), Guangzhou (4), Changsha (1), Chengdu (1), Urumqi (1), Xi an(1) Destination: Moscow (5), Frankfurt (4), Paris (3), Heathrow (3), AMS (2), Rome (2), Milan (2), Munich (2), Stockholm, Brussels, St Petersburg, Vienna, Düsseldorf, Berlin, Geneva, Madrid, Gatwick (1) Source: IAR analysis
Huge Opportunities for European Airports China-Europe Routes operated by Chinese Airlines in 2017: 59 Routes Origin: Beijing (21), Shanghai (12), Guangzhou (4), Chengdu (3), Xi an(3), Kunming(2), Urumqi(2), Wuhan (2), Changsha, Shenzhen, Qingdao, Tianjin, Xiamen (1) Destination: Moscow (11), Paris (6), Frankfurt (5), Rome (5), AMS (4), St Petersburg (3), Heathrow (3), Madrid (3), Prague (3), Milan (2), Munich (2), Stockholm, Brussels, Manchester, Berlin, Vienna, Minsk, Warsaw, Dusseldorf, Zurich, Barcelona, Geneva, Gatwick (1) Source: IAR analysis
New Routes Opened by Chinese Airlines: 2017 vs 2014 Air China (6): Beijing - Minsk / Warsaw /Zurich Chengdu - Paris Shanghai Barcelona Shenzhen Frankfurt (drop Beijing Gatwick) China Eastern (5): Shanghai Amsterdam / Madrid / Prague / St Petersburg Kunming Paris China Southern (3): Urumqi St Petersburg Wuhan Moscow / Rome Hainan Airlines (5): Beijing Manchester / Prague Xi an Rome / Paris Chongqing Rome Tianjin Airlines (3): Chongqing Gatwick / Moscow Tianjin - Moscow Beijing Capital Airlines (2): Chengdu Madrid Qingdao Moscow Lucky Air (1): Kunming Moscow Xiamen Airlines (1): Xiamen Amsterdam Sichuan Airlines (2): Chengdu Moscow/ Prague Source: IAR analysis
Europe-China Routes Operated by European Airlines in 2014:32 Routes Origin: Amsterdam (5), Paris (4), Frankfurt (4), Moscow (4), Heathrow (3), Helsinki (4), Munich (2), Zurich (2), Copenhagen (2), Vienna, Warsaw (1) Destination: Beijing (12), Shanghai (9), Guangzhou (2), Chengdu (2), Chongqing, Hangzhou, Wuhan, Xiamen, Xi an, Shenyang, Nanjing (1) Source: IAR analysis
European airlines are cautious in opening up new routes Europe-China Routes Operated by European Airlines in 2017: 37 Routes Origin: Amsterdam (5), Paris (4), Frankfurt (4), Moscow (4), Heathrow (2), Helsinki (5), Munich (2), Zurich (2), Copenhagen (2), Vienna (2), Kiev, Rome, Madrid, Milan, Warsaw (1) Destination: Beijing (13), Shanghai (11), Guangzhou (3), Nanjing (2), Chengdu, Chongqing, Hangzhou, Wuhan, Xiamen, Xi an, Qingdao, Urumqi Source: IAR analysis
New Routes Opened by European Airlines: 2017 vs 2014 Lufthansa: Frankfurt Qingdao (drop Shenyang) Iberia: Madrid - Shanghai Finnair: Helsinki - Guangzhou Neos Air: Milan Nanjing BA: Drop Heathrow - Chengdu Austrian Airlines: Vienna - Shanghai Siberia: Moscow - Urumqi Transaero: Drop Moscow - Beijing Ukraine: Kiev Beijing Alitalia: Rome Beijing Source: IAR analysis
But European Carriers have more advantage on trunk routes 2017 TOP 10 Routes in the China-Europe Market Rank Name Code Market Share Carrier 1 Carrier 2 Carrier 3 M/S 1 M/S 2 M/S 3 1 Shanghai-Paris PVG-CDG 6.52% Air France China Eastern Air China 3.14% 2.58% 0.81% 2 Beijing-Moscow PEK-SVO 6.46% Aeroflot Air China Hainan Airlines 4.03% 1.28% 1.14% 3 Shanghai-Frankfurt PVG-FRA 5.66% Lufthansa Air China China Eastern 3.62% 1.08% 0.95% 4 Beijing-Paris PEK-CDG 5.17% Air France Air China - 2.88% 2.29% - 5 Shanghai-Moscow PVG-SVO 4.84% Aeroflot China Eastern - 3.31% 1.53% - 6 Beijing-Frankfurt PEK-FRA 4.77% Air China Lufthansa - 2.68% 2.10% - 7 Beijing-Heathrow PEK-LHR 3.91% Air China British Airways - 2.69% 1.22% - 8 Shanghai-Heathrow PVG-LHR 3.68% British Airways China Eastern Virgin Atlantic 1.30% 1.29% 1.09% 9 Shanghai-Amsterdam PVG-AMS 2.77% KLM China Eastern - 2.22% 0.55% - 10 Beijing-Amsterdam PEK-AMS 2.47% KLM China Southern - 1.30% 1.17% - Note: routes with monthly frequency >=8; Source: IAR analysis based on OAG data (July, each year)
New markets: dynamic but some uncertainty 2017 Bottom 10 Routes in the China-Europe Market Rank Name Code Market Share Carrier 67 Urumqi-Moscow URC-SVO 0.39% China Southern Airlines 68 Changsha-Frankfurt CSX-FRA 0.38% China Southern Airlines 69 Nanjing-Milan NKG-MXP 0.34% Neos Air 70 Chongqing-Gatwick CKG-LGW 0.30% TianJin Airlines 71 Tianjin-Moscow TSN-SVO 0.30% TianJin Airlines 72 Chongqing-Moscow CKG-SVO 0.30% TianJin Airlines 73 Chengdu-Prague CTU-PRG 0.29% Sichuan Airlines 74 Urumqi-Moscow Domodedovo URC-DME 0.27% Siberia Airlines 75 Chengdu-Madrid CTU-MAD 0.25% Beijing Capital Airlines 76 Chongqing-Rome CKG-FCO 0.23% Hainan Airlines Historical opportunities to shape these dynamic markets Note: routes with monthly frequency >=8 Source: IAR analysis based on OAG data (July, each year)
Main Airports in the China-Europe Market 2007 Rank 2017 27% Beijing 1 Beijing 22% 19% Shanghai Pudong 2 Shanghai Pudong 17% 11% Frankfurt 3 Moscow 8% 9% Paris 4 Paris 8% 6% Heathrow 5 Frankfurt 7% 5% Amsterdam 6 Heathrow 5% 4% Moscow 7 Amsterdam 4% 3% Guangzhou 8 Guangzhou 4% 3% Mucich 9 Helsinki 2% 3% Helsinki 10 Mucich 2% 90% 78% Source: IAR analysis
Analysis of Connecting Market
Traffic diversion in the China EU market 2007 3.137.106 Transfer Pax 中转 旅客 52% 2007 Direct Pax 直飞 旅客 48% 1.565.629 2016 2.396.863 1.434.992 2007 2016 Direct Pax 直飞旅客 Transfer Pax 中转旅客 Source: IAR analysis based on PaxIS data Transfer Pax 中转 旅客 57% Direct Pax 直 飞旅客 43%
Strong competition from the Middle East Traffic diversion in the China EU market 2007 6.000.000 542% 600% 5% 3% 2% 5.000.000 500% 48% Direct Pax 直飞旅客 EU Transfer Pax 欧洲中转 CN Transfer Pax 中国中转 4.000.000 400% 42% ME Transfer Pax 中东中转 Other Transfer Pax 其他中转 3.000.000 300% 2.000.000 1.000.000 84% 100% 200% 100% 10% 4% 2016 - Total 总旅客量 Transfer Pax 中 ME Transfer Pax 转旅客 中东中转旅客 2007 2016 增长率 0% 14% 29% 43% Direct Pax 直飞旅客 EU Transfer Pax 欧洲中转 CN Transfer Pax 中国中转 ME Transfer Pax 中东中转 Other Transfer Pax 其他中转 Source: IAR analysis based on PaxIS data
Rank Airport Transfer Pax Source: IAR analysis based on PaxIS data Shifting Power in Transit Hubs 2007 2016 Share of Transfer Pax Airport Transfer Pax Share of Transfer Pax 1 FRA : Frankfurt 369452 23.6% PEK : Beijing 437566 13.9% 2 CDG : Paris 187508 12.0% FRA : Frankfurt 302550 9.6% 3 AMS : Amsterdam 152952 9.8% SVO : Moscow 260578 8.3% 4 HEL : Helsinki 135965 8.7% DXB : Dubai 218727 7.0% 5 MUC : Munich 135889 8.7% AMS : Amsterdam 216484 6.9% 6 PEK : Beijing 98004 6.3% CDG : Paris 190185 6.1% 7 SVO : Moscow 68157 4.4% PVG : Shanghai 165800 5.3% 8 DXB : Dubai, AE 62607 4.0% HEL : Helsinki 150792 4.8% 9 LHR : Heathrow 42646 2.7% HKG : Hong Kong 149328 4.8% 10 PVG : Shanghai 36420 2.3% IST : Istanbul 144366 4.6% 11 VIE : Vienna 36060 2.3% DOH : Doha 132048 4.2% 12 CPH : Copenhagen 32691 2.1% MUC : Munich 103913 3.3% 13 HKG : Hong Kong 28678 1.8% CAN : Guangzhou 64889 2.1% 14 MXP : Milan 26830 1.7% AUH : Abu Dhabi 62340 2.0% 15 IST : Istanbul 15765 1.0% ZRH : Zurich 58035 1.8%
Ιαν 2015 Φεβ 2015 Μαρ 2015 Απρ 2015 Μαϊ 2015 Ιουν 2015 Ιουλ 2015 Αυγ 2015 Σεπ 2015 Οκτ 2015 Νοε 2015 Δεκ 2015 Ιαν 2016 Φεβ 2016 Μαρ 2016 Απρ 2016 Μαϊ 2016 Ιουν 2016 Ιουλ 2016 Αυγ 2016 Σεπ 2016 Οκτ 2016 Νοε 2016 Δεκ 2016 Ιαν 2017 Φεβ 2017 Μαρ 2017 Απρ 2017 Comparison of Average Fare (USD) of China-Europe Market 900 800 700 600 500 400 300 EU Big 3 CN Big 3 Emirates Hainan Market Average Source: IAR analysis based on PaxIS data
Route Network of Emirates
Hub configuration for Emirates at Dubai Source: IAR analysis based on OAG database
Source: IAR Analysis based on Ascend Fleet Data
Source: IATA WATS 2016
Main Players
Main Players in the China-Europe Origin-Destination Market (2016) Rank Airlines Pax Carried Share 1 Air China 2,041,552 18.4% 2 Lufthansa 1,040,721 9.4% 3 Aeroflot 871,193 7.9% 4 China Eastern 809,540 7.3% 5 Air France 800,107 7.2% 6 KLM 666,567 6.0% 7 China Southern 652,014 5.9% 8 Hainan Airlines 584,414 5.3% 9 Emirates 454,651 4.1% 10 Finnair 423,995 3.8% Source: IAR analysis based on 2016 annual two-way passenger data form IATA PaxIS
4 4 4 4 4 4 4 4 5 7 9 12 12 12 12 12 13 14 14 14 14 16 New Comers to China-Europe Market 2015 New Entry CN: Sichuan Airlines EU: Ukraine Airlines Alitalia 2016 CN: Tianjin Airlines Xiamen Airlines EU: Iberia 2017 CN: Capital Airlines Lucky Air EU: Neos Air Siberia Airlines 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 中国航空公司 CN Carriers Note: routes with monthly frequency >=8 Source: IAR analysis based on OAG data (July, each year) 欧洲航空公司 EU Carriers
Centre of Gravity moves to China Share of Passengers in the China-Europe Market Europe 34% China 66% Source: IAR analysis based on 2016 annual two-way passenger data form PaxIS
Top 10 European Cities to China: Relatively stable 2007 2016 Rank 排名 Airport 机场 Pax 旅客人数 Avg Fare 平均票价 ( 美元 ) Airport 机场 Pax 旅客人数 Avg Fare 平均票价 ( 美元 ) 1 Paris-De Gaulle 巴黎戴高乐 353552 775 Paris-De Gaulle 巴黎戴高乐 667482 479 2 London-Heathrow 伦敦希斯罗 320688 928 London-Heathrow 伦敦希斯罗 575454 567 3 Frankfurt 法兰克福 234946 734 Moscow 莫斯科 415232 264 4 Amsterdam 阿姆斯特丹 177068 673 Frankfurt 法兰克福 403921 518 5 Moscow 莫斯科 160701 522 Rome-Da Vinci 罗马 252731 348 6 Madrid 马德里 106438 633 Amsterdam 阿姆斯特丹 239388 534 7 Rome-Da Vinci 罗马 96585 612 Madrid 马德里 210404 288 8 Copenhagen 哥本哈根 86046 736 Milan-Malpensa 米兰 177340 511 9 Munich 慕尼黑 81921 888 Munich 慕尼黑 173439 625 10 Barcelona 巴塞罗那 68133 628 Barcelona 巴塞罗那 169442 323 Source: IAR analysis based on PaxIS data
Top 10 Chinese Cities to Europe: Changing Market Dynamics Rank 排名 City 城市 2007 2016 Pax 旅客人数 Avg Fare 平均票价 ( 美元 ) City 城市 Pax 旅客人数 Avg Fare 平均票价 ( 美元 ) 1 Beijing 北京 1466576 717 Shanghai 上海 1938037 515 2 Shanghai 上海 1179123 774 Beijing 北京 1826133 523 3 Guangzhou 广州 154550 700 Guangzhou 广州 431922 393 4 Chengdu 成都 38297 630 Chengdu 成都 189600 348 5 Wenzhou 温州 19881 528 Wenzhou 温州 168637 246 6 Uruqi 乌鲁木齐 15583 448 Hangzzhou 杭州 97199 328 7 Shenyang 沈阳 13134 647 Chongqing 重庆 83996 347 8 Sanya 三亚 12659 656 Wuhan 武汉 80222 370 9 Fuzhou 福州 11946 591 Xi'an 西安 69248 361 10 Xiamen 厦门 10065 648 Nanjing 南京 68550 455 Source: IAR analysis based on PaxIS data
China-Europe Routes Operated by Chinese Airlines Airlines 2014 2015 2016 2017 Air China 18 18 20 23 China Southern 10 10 13 12 China Eastern 6 7 11 11 Hainan Airlines 4 7 7 9 total 38 42 51 55 Note: routes with monthly frequency >=8 Source: IAR analysis based on OAG database (July, each year)
HNA: Multi brand strategy China-Europe Routes Operated by Chinese Airline Group Airlines 2014 2015 2016 2017 Air China 18 18 20 23 China Southern+Xiamen Airlines 10 10 14 13 China Eastern 6 7 11 11 Hainan Airlines + Capital + Tianjin + Lucky Air 4 7 10 15 total 38 42 55 62 Note: routes with monthly frequency >=8 Source: IAR analysis based on OAG database (July, each year)
Europe: Most important market for Air China Source: IAR analysis based on Sabre Market Intelligence
China-Europe Routes Operated by European Airlines Airlines 2014 2015 2016 2017 AF+KL 9 9 9 9 Lufthansa 6 6 7 6 Finnair 4 4 5 5 Aeroflot 3 3 3 3 BA+Iberia 3 3 3 3 total 25 25 27 26 Note: routes with monthly frequency >=8 Source: IAR analysis based on OAG database (July, each year)
Summary Rapid development of China-Europe aviation market A number of new city-pairs in both Europe and China have established direct flights Growth is mainly driven by Chinese airlines European airlines still maintain advantages on trunk routes Chinese airlines are more aggressive in opening up new routes Middle East airports are gaining more market share of transfer passengers in the China-Europe market Shifting power in transit hubs The competitive landscape is shaped by airline network & pricing strategy Emerging carriers & airports
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