China Eastern, Delta Seek Beijing Dominance

As Beijing gets set to welcome a massive new, seven-runway international airport in 2019, the South China Morning Press (SCMP) is reporting that China’s third-largest airline, China Eastern is hoping to gain a major toehold at the facility by expanding on an existing alliance with Delta Air Lines.

When it becomes fully operational, the facility currently being called Beijing Daxing International Airport is expected to have a maximum capacity of 100 million passengers per year. Combining that with the 94 million passengers served by the existing, three-runway Beijing Capital International Airport’s, means Beijing is poised to become “one of the most competitive markets in the world,” said Mayur Patel of OAG Aviation.

While inbound travel will certainly make up its share of traffic to the two facilities, the outbound market is booming. According to the China National Tourism Administration (CNTA), outbound travel from China has grown by 270 percent since 2008 and is expected to reach 200 million departures annually by 2020.

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And China’s three state-owned carriers are embarking upon “cutthroat” competition to dominate the nation’s capital, reports the Post.

While the three carriers, Guangzhou-based China Southern Airlines, Shanghai-based China Eastern and Beijing-based Air China already compete on a number of regional routes, the new airport moves that competition to a much larger playing field.

For China Eastern, which will relocate all its flights to the new airport, the partnership means utilizing the “operational experience” of Delta, which “helped with the success of Hartsfield-Jackson Atlanta International Airport,” according to the Post.

Both China Eastern and China Southern will be upsizing operations when they move to the new airport, where they are expected to handle about 80 percent of all travelers. Currently, the duo jointly handles less than a third of passengers at Beijing Capital airport.

Both airlines have reported they expect to house more than 200 aircraft at the new facility, for a combined 900 flights daily. As a comparison, Hartsfield-Jackson, the busiest airport in the world, handles about 2,500 inbound and outbound flights per day, and Delta owns an approximate 75 percent share of that traffic.

Delta is bullish on the new airport, according to the Post.

“With new infrastructure developments [coming], that will give China Eastern a tremendous uplift, and they can base aircraft over there and set up a very sizeable network,” said Wong Hong, Delta’s China president, in a statement to the Post.

“We see that as a very strong second hub we develop, together with Delta. We have a lot of experience in developing hubs in the United States, so using that experience, working with China Eastern, we are so excited to partner with them, expanding a market like Beijing.”

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All of China’s airlines are teaming up with major U.S. carriers (or vice versa.)

Delta, which owns a 3.55 percent stake of China Eastern, also has a codeshare partnership with the airline. American recently purchased a 2.76 percent share in China Southern, while Air China has a codeshare-type agreement with United Airlines.

Delta also recently announced it would expand its service to China when it launches a new route to China Eastern’s home base in Shanghai in 2018. The new route, from Atlanta, joins existing service from Detroit, Seattle and Los Angeles to Shanghai.

The partnership is an interesting one for Delta, which has been vocally critical of state-run airlines, which it says are propped up by unfair subsidies. Although Delta, in concert with a lobbying group called Partnership for Open & Fair Skies, is primarily opposed to a trio of Gulf Carriers (Emirates, Etihad and Qatar), Delta CEO Ed Bastian has frequently said that competing with state-run airlines creates an “unfair playing field.”