Chinese airlines spreading wings in WA

Chinese airlines spreading wings in WA

Tue, 17/04/2018 - 09:11
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Tony Huang

TAKE OFF Tony Huang says Tourism WA has been instrumental in helping promote China Southern in Australia. Photo: Philip Gostelow

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Airlines aim to turn potential into reality as Western Australia strives to become a preferred destination for Chinese travellers.

November 2011 was intended to be a turning point in Western Australia’s China tourism strategy.

The month marked the start of the first direct flight operated between WA and the Chinese mainland, as China Southern Airlines built on an already long-running relationship with the state by establishing the Perth to Guangzhou route.

Shortly after the connection was established, state government agency Tourism Western Australia set a lofty goal – 100,000 Chinese visitors by 2020, who would spend a collective $500 million.

But eight years on from the first flights, WA remains far behind the eastern states in the race for Chinese tourists.

The latest data released by Tourism Research Australia showed that the 2017 Year of China-Australia Tourism was a resounding success.

TRA said 1,251,000 Chinese travellers came to Australian shores in 2017, the biggest group of visitors, just in front of New Zealand with 1,231,000.

Just 58,600 of those tourists made it to WA, but that number did represent a rise of 14.2 per cent, an indication the McGowan government’s $425 million destination marketing commitment for 2017 to 2022 is beginning to make an impact. 

Since the direct flights were launched between Guangzhou and Perth, Chinese visitation to WA has more than tripled, from just 18,900 in 2011.

Perth Airport chief executive Kevin Brown said he believed that number was poised to grow further, as the state government allocated a significant portion of its $425 million destination marketing budget to increasing China tourism.

“As we build the profile and reputation of Perth and Western Australia in the Chinese market, we will unlock even greater numbers of Chinese tourists,” Mr Brown told Australia China Business Review.

“As Chinese tourists are traditionally significant spenders, the flow-on benefits for tourism operators, hotels, hospitality and retail outlets could be enormous.

“We also need to build on this growing momentum by attracting more tourists, more business travellers and more international students from China.”

China Southern, as the leader among Chinese airlines servicing Australia, has played, and is poised to continue to play, a key role in that growth.

In 2017, the airline accounted for around 35 per cent of the total passenger movements between the two countries, data from the Department of Infrastructure and Regional Development showed.

Late last year, China Southern added an additional flight to its Perth-Guangzhou service, now operating five times a week using its 258-seat Airbus A330.

At the same time, Cathay Pacific Airways introduced higher-capacity Airbus A350 aircraft to its daily overnight flight between Perth and Hong Kong, increasing the number of seats available by more than 20,000 per year.

China Southern has also assumed a key marketing role in WA, joining forces with Tourism WA to promote the state across Chinese digital platforms, including comprehensive offerings on Ctrip and Fliggy.

China Southern operates 56 weekly flights to Australia and, alongside increased Perth capacity, has added more planes to its Adelaide-Guangzhou and Brisbane-Guangzhou routes, as well as establishing a connection to Cairns.

The additional flights are part of a plan to grow annual passenger movements by 10 per cent over the next five to eight years.

However, China Southern’s ambitions of increasing capacity to its top-performing destinations, Sydney and Melbourne, would likely be constrained by a lack of airport capacity.

That could be viewed as a great opportunity for WA, but China Southern Airlines general manager Tony Huang said while passenger growth was about on par with Sydney and Melbourne routes, Perth to Guangzhou still represented a challenge.

"We are still working on it, but honestly for the past year, our profit is not where we want it," Mr Huang told Australia China Business Review.

“We need to attract and bring customers from WA to China, but I’m not only concentrating on this part, increasing travel both ways is very important.”

Mr Huang said China Southern was working closely with the Perth Convention Bureau, Austrade and Tourism Western Australia on new initiatives to increase take-up of the route, focusing strongly on high-value business travellers.

"Most of the tourists, the first time they come to Australia they come to Sydney to see the Opera House, but now tourists in China want to explore more, they don't want to see those traditional things, so I think Perth is in a very good place," Mr Huang said.

“We have had very good conversations and we will find the opportunities to attract the Chinese market to here, and also local travellers to China.

“Tourism WA has also helped us a lot, they have helped us to promote our destinations in China through Guangzhou and also promote our airline.

“We are working hard to bring more high-end people back into WA.

“Together we will improve the route and improve our bottom line and revenue.”

Part of the state government’s newly unveiled Two-Year Action Plan for Tourism Western Australia is a new China market strategy, which will be implemented this year.

The plan is designed to build on former strategies employed by Tourism WA, including the 100,000 visitors by 2020 commitment.

A key plank of the China strategy will focus on increasing aviation capacity between WA and China, including establishing a second direct route.

A Tourism WA spokesperson said while the agency could not comment on specifics due to confidentiality restrictions, a second regular service was one of its top priorities.

“Positive discussions are continuing with a focus on securing a second Chinese airline for Perth, increased capacity and ensuring optimal conditions for any new service,” the spokesperson said.

China Eastern Airlines is set to trial Perth to Shanghai flights in October, while Mr Huang said China Southern would also be evaluating the possibility of extra direct services.

If the demand is there and the airline finds it profitable, those services could begin as early as 2019, with China Southern and China Eastern are gearing up to move to a new base in Beijing, a $US12.9 billion ($16.8 billion) airport being built in the city’s southern suburb of Daxing.

The Beijing area is traditionally dominated by China’s largest airline, Air China, however the new facility will have the capacity to serve more than 100 million passengers a year.

China Southern is planning to deploy more than 200 aircraft at the airport by 2020 – equating to around 20 per cent of its total fleet.

"At China Southern, we are developing two transit hubs, one is already established in Guangzhou, the other one is the newest airport in Beijing, which is very important to the whole country's tourism strategy," Mr Huang said.

“So far, we have just the one direct flight from Perth to Guangzhou, but I hope that in the future when the market becomes more mature that we can have another flight to Beijing, to the new airport.

“That airport is really important, for Australians, our data shows that the main destinations in China are those big cities – Shanghai, Guangzhou and Beijing.

“The second-tier cities do not attract a high volume of passengers, but maybe in the future we will see that market will grow.”

Mr Huang also welcomed the entry of China Eastern to the Australian market, saying he hoped the trials would lead to the establishment of a permanent route.

China Southern and China Eastern are both members of the international SkyTeam Alliance.

"Competition is good, because if China Eastern flies from Shanghai to Perth it will make us work harder and also work together and see how we can attract more customers from China," Mr Huang said.

“It’s a case of the more the merrier, bringing more people in. Look at Sydney, it’s grown from two, to eight to nine companies.

“China is a very big market, once we bring more customers, more business travellers and tourists from China to here, it can be a flow.”

Mr Huang had a similar perspective when asked about the impact of Qantas’ newly launched direct flights between Perth and London, which took off in March.

While the new connection usurped China Southern’s home base of Guangzhou in providing the fastest route between Europe and Australia, Mr Huang said it also provided significant opportunity.

"Our total number of passengers from Australia to London is already decreasing, but Qantas' new direct flights will attract a lot of passengers," Mr Huang said.

“They will want to know if there are any other options they can choose, so that is a great opportunity for us.

“(The Qantas flight) is good for passengers, but from the other point of view, the direct flight takes so long.

“Passengers often prefer to have a rest, a transit point, whether in Singapore or Guangzhou. This is a very good opportunity for us.”