China 2016: CATEGORIES IN BRIEF | Airlines
STRONG AIR TRAVEL INCREASE LIFTS CATEGORY BRAND VALUE
Airlines and travel agencies tied for fifth place in the rate of category value growth, with a 39 percent increase, in the BrandZ™ Top 100 Most Valuable Chinese Brands 2016. Rising disposable income, growth of tourism, improved domestic transportation infrastructure and budget airfares were among the factors driving value increases.
China remained the world’s number one source market for tourism, according to the World Tourism Organization, a United Nations agency (UNWTO). Outbound tourism is expected to increase 11 percent to 133 million visits in 2016, according to the China National Tourism Administration (CNTA). And UNWTO ranks China fourth as a tourism destination after France, the US and Spain, although the rate of inbound tourism has slowed, according to CNTA.
To capitalize on these trends, airlines improved service and marketing, expanded routes and increased a ordability. Along with revenue gains, depressed oil prices also helped enhance airline profitability. Despite these improvementsairlinescontinuedtoscore low in RepZ, the BrandZTM measurement of corporate reputation.
Five airline brands are included in the BrandZTM China Top 100: Air China, China Eastern Airlines, China Southern Airlines, Hainan Airlines and Spring Airlines, a budget brand. Domestic budget air travel is one of the fastest growing industry segments, with the number of budget travelers now totaling around 7 percent of China’s domestic air travel market of about 390 million annual fliers, according to some estimates.
Air China, number 19 in the BrandZTM China Top 100, increased its international travel. It added overseas routes and derived over one-third of its revenue from overseas business, helped in part by its link with other international carriers through its membership in Star Alliance.
China Eastern Airlines, ranked 29, usually benefits from business at its heavily travelled Shanghai hub, but the airline increased its marketing in anticipation of the 2016 opening of Disneyland Shanghai. China Eastern Airlines is part of SkyTeam Alliance, which includes Delta.
China Southern Airlines, ranked 34, a domestictravelleader,benefitedfrom the surge in local tourism and increased travel between the Chinese mainland and Taiwan. China Southern Airlines is part
of SkyTeam Alliance, which positions it well to handle the domestic connecting flights of international visitors.
Hainan Airlines, ranked 59, continued to expand international routes, and advertised extensively overseas. It re- entered Australia and announced the first flight between Manchester and Beijing. It planned to introduce a Rome-Xi’an route, as part of China’s One Belt, One Road initiative to add trading links. Xi’an and Rome were terminuses of the Silk Road.
Spring Airlines appeared in the BrandZTM China Top 100 for the first time, at rank 98. The leading low-cost carrier, formed in 2004, floated a successful IPO in January 2015, to fund accelerated expansion. Although the airline initially focused on domestic travel, it has announced plans for international flights to Moscow, Melbourne, Tokyo and other destinations. (Please see the interview with Spring Airlines Chairman Wang Zhenghua featured in this report.)