What European Regional Airports Need to Know About China

Europe

November 7, 2018//-China is now the single largest source of outbound tourists in the world.

 In 2017 the number of trips by Chinese travelers to foreign lands grew to 129 million, up 5.7% from 2016.

For many countries China is a major, if not the largest, source of inbound tourists. This may be little surprise for countries in Asia such as Thailand, Japan, South Korea and Vietnam, but the importance of China as a source for foreign tourists is growing across Europe.

As a consequence, it’s important to adapt the tourism offer to meet the needs of this market. Much of this has been about accommodating the group travel preferences of Chinese visitors but increasingly they are interested in independent travel too, especially Millennials.

It is not just tourism industries that need to get ready but also airports, airlines and governments. Thailand is an example of a country that has seen huge growth in Chinese visitors.

The country has a liberal approach to air services and as a consequence as many as 20 Chinese airlines, and a quite a few Thai airlines, are now flying back and forth between the two countries.

The result has been an average annual increase in airline capacity between China and Thailand of 29% since 2010.

In 2018 there will be around 27 million seats in this market. The number of routes operated with scheduled air services between China and Thailand has risen almost 10-fold, from 22 in 2010 to 215 this year.

Australia is another example of a tourism market which has exploded. The market size is smaller but it is further to travel and inevitably the Chinese making their first tentative forays abroad are most likely to travel to nearer destinations both because they are more mature as destinations for the Chinese and they will cost less.

In this instance the average annual capacity growth rate has been 19% since 2010. The number of routes being operated between China and Australia has grown from 9 in 2010 to 39 this year.

So where will the Chinese travel next?

Europe is high up on their agenda and there are many European airports which already have multiple direct services to China.

A few, such as Moscow Sheremetyevo, Paris Charles de Gaulle and London Heathrow have services to 10 or more airports in China.

But it’s not just the largest airports that have succeeded in winning air services to China. There are a handful of airports in Europe, each with around 10 million departing seats annually, or fewer, which support these services.

A couple are in Russia – St Petersburg (LED) and Vnukovo (VKO) and then there is Brussels (BRU) and Warsaw (WAW). Interestingly, Dusseldorf (DUS) manages to operate to 5 Chinese destinations and Milan Malpensa (MXP) to 4.

While it would not be surprising that new operations to China are new Chinese destinations for some of Europe’s biggest airports, many European regional airports should be aspiring to win a Chinese flight.

Two European airports which have been particularly successful in winning passenger traffic to and from China are Helsinki (HEL) and Moscow’s Sheremetyevo Airport (SVO).

Both have used their geographic location to the east of Europe to funnel traffic between Europe and points in China.

Helsinki now has scheduled services to four destinations in China and runs a tight operation connecting passengers at its hub.

According to OAG Traffic Analyser, 83% of passengers from China to Helsinki are connecting onwards from the hub. The Moscow operation is similar although the traffic mix is different.

The services to China are supported by a higher level of local demand with 41% of passengers being O&D passengers. A further 19% connect at the Chinese end of their journey and 39% connect onwards from Moscow.

Many of the new air services are being developed by Chinese airlines, supported by a policy environment which has encouraged new international routes, economic development for Chinese cities and citizens to travel and bring back ideas to China.

For European airports wishing to undertake conversations with Chinese airlines, much of what is familiar in route development has to be set to one side as they grapple with a different way of doing business and a different basis for decision-making.

Getting the right level of contacts is key, as is appreciating what their Chinese counterparts are looking for.

Thankfully, the huge order books for new aircraft which many of the Chinese airlines have make the task a little easier as they have to fly somewhere.

China Southern is looking to add 125 aircraft to the current fleet of 582 and while many are for regional air services the orders do include 20 A350 and 14 B787 aircraft.

At China Eastern there are 167 aircraft on order to add to the 515 in operation and these include 20 B777 aircraft. Air China doesn’t have much in the way of orders for long haul aircraft but Hainan Airlines will be adding a couple of A330’s and 10 B787’s. And these are just the biggest Chinese airlines.

There are more. At the moment, fewer than 10% of the Chinese population travel overseas and only around 10% own a passport. Since I’ve been working in this industry, I’ve seen the proportion of Americans who hold a passport rise from 4% to 42%. What if we are to see the same with China?

It’s time we all got ready. Having completed a number of market studies and provided recommendations to airports across Europe on China, we are genuinely excited at the real opportunities that regional airports have in securing services to China in the coming years; there really is something for everyone to look at here!

By Becca Rowland Partner at MIDAS Aviation

MIDAS Aviation is an aviation consultancy working with clients to understand air service demand, strategic positioning and route development. MIDAS Aviation has particular expertise in the Chinese market.

 

 

 

 

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