The analysis to the dual mode operation of low-cost airlines & legacy Airlines. 海南航空 Hainan Airlines

The analysis to the dual mode operation of low-cost airlines & legacy Airlines 海南航空 Hainan Airlines 1

Catalogue Part I. The Development, Present Situation and the Future of Low-cost Airlines Part II. The Introduction of Global Airlines Dual Mode Operation and the Case Analysis Part III. Thinking Given to the China Airlines

30% 25% 20% 15% 10% 完成驻外运行保障需要具备的素质 Part I. The Development, Present Situation and the Future of Low-cost Airlines 一 The development history After nearly 40 years of development, the seats capacity provided by the low cost airline have accounted for 27% of the whole industry. In Europe and America region, its share of the transport capacity has reached more than 30%. Like legacy Airlines, low cost airlines has become the mainstream of the business model. Global low cost airline s capacity in 2001-2014 8% 9.50% 11.4% 13.5% 14.9% 16.7% 19.3% 21.1% 21.9% 23.4% 24.3% 26.1% 26.3% 27.2% 5% 0% Data sources:capa

Part I. The Development, Present Situation and the Future of Low-cost Airlines 二 Development status- Contrast of market share Comparison between regions: Asian low-cost airlines development lags behind that of Europe and the United States. China's low-cost carrier is still in its infancy, which owned only 3% of market share in 2013. The contrast of low cost market share between China and other parts of the world 低成本其他 39% 61% 72% 78% 28% 22% 3.0% 97.00% 欧洲地区北美地区亚洲地区中国国内 Data sources::caac OAG

Part I. The Development, Present Situation and the Future of Low-cost Airlines 二 Development status- Contrast of Profitability Low cost airlines compared with the Legacy Airlines: The operating margin of the world regional low-cost airlines is generally higher than the traditional airlines Europe 2009 年 2010 年 2011 年 2012 年 North America 2009 年 2010 年 2011 年 2012 年 Asia 2009 年 2010 年 2011 年 2012 年瑞安易捷汉莎法荷 IAG 美西南捷蓝西捷美国达美美联合亚航宿雾马航新航低成本航企全服务航企低成本航企全服务航企低成本航企全服务航企 Data sources: the Airline Business and company annual reports, Note: data in the table is for operating margins

Part I. The Development, Present Situation and the Future of Low-cost Airlines 三 the Future of low-cost airlines Low cost airlines in the asia-pacific region rise rapidly. The capacity share has risen from 1.1% in 2001 to the current 24%, closing to the world's average level. The low-cost airlines of legacy Airlines around China are entering the Chinese market. Through transfering to Seoul, Tokyo, Singapore and so on, they implement the diversion of the tourist market in long-haul routes from China to Europe, the United States and Australia The growth trend chart of LCCs capacity 1.10% 1.8%2.4%4.5% share in the asia-pacific region 9.0% 6.2% 12.3% 14.1%15.7% 17.7% 19.1% 24.1%24.0% Year Number of airlines route number Number of navigation point to China Weekly flights number Weekly capacity(seats) 2010 7 24 11 254 51396 2013 14 50 26 652 133686 增长 100% 108% 136% 157% 160% Data sources: IATA Pax-is OAG

Part II. The Introduction of Global Airlines Dual Mode Operation and the Case Analysis 一 A mixture of brand strategy of different industries For taking over the different market segments, a lot of industry enterprises pursue to maximize the profit of the market share and revenue through implementing the strategy of double or more brands. For example, automotive, fast moving consumer goods and luxury goods. There is no exception for the aviation industry

Part II. The Introduction of Global Airlines Dual Mode Operation and the Case Analysis 二 The case analysis of dual mode operation of Jetstar and Qantas Form Jetstar s foundation in 2004 by 2013, the passenger traffic volume has accounted for 38.32% of the Qantas Group (Qantas Group), income accounted for 20.7%. Jetstar gave feedback to Qantas by profits. Jetstar developed rapidly. Through joint ventures, Jetstar established subsidiaries in Japan, Singapore and Vietnam, and has entered the Chinese market. Jetstar s percentage of passenger traffic volume in Qantas Group 42.09% 40.06% 38.09% 38.32% Jetstar s percentage of income in Qantas Group 19.6% 17.5% 16.0% 12.7% 10.0% 20.7% 2010 年 2011 年 2012 年 2013 年 2008 年 2009 年 2010 年 2011 年 2012 年 2013 年 Data sources::capa

Part II. The Introduction of Global Airlines Dual Mode Operation and the Case Analysis 二 The case analysis of dual mode operation of Jetstar and Qantas--- Fleet composition As a legacy Airlines, Qantas owns eight types of aircraft, and has a complex fleet structure and diversified space layout. As a low-cost airlines, Jetstar has only 3 kinds of aircraft and a single fleet structure. The layouts are mainly single compartment. B747 B767 B717 B737 A320 A330 A380 B787 A320 A321 A330

Part II. The Introduction of Global Airlines Dual Mode Operation and the Case Analysis 二 The case analysis of dual mode operation of Jetstar and Qantas--- The route network structure Qantas has a comprehensive route network layout. It forms a perfect hub and spokes network in its international and domestic route. Jetstar airline gives priority to point-to-point routes in its network layout and its network structure is simple and concentrated. In terms of network coordination, Jetstar links its short and medium range routes in Australia and Singapore with the medium and long range of Qantas international routes, so that to construct the convenient and rapid transit. Jetstar s route network Qantas route network

Part II. The Introduction of Global Airlines Dual Mode Operation and the Case Analysis 二 The case analysis of dual mode operation of Jetstar and Qantas---Customer resource Members on Jetstar flight can accumulate mileage, convert Qantas flight and rewards, and also take the corresponding rights and interests for the member of other airlines in the oneworld alliance. But Qantas corporate clients plan is not shared with Jetstar because of the differences of customer base..

Part II. The Introduction of Global Airlines Dual Mode Operation and the Case Analysis 二 The case analysis of dual mode operation of Jetstar and Qantas---Brand positioning Qantas emphasizes "outstanding" in the brand publicity. The excellent reputation symbolizes Qantas with reliability, safety, advanced technology and high-quality service. Instead, Jetstar emphasizes the best regional low-cost airlines, " in brand publicity. The brand distinguishes clearly. Qantas Print ads Jetstar s Print ads

Part III. Thinking Given to the China Airlines

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