Spring Airlines rides on lucrative international operation to challenge Air Asia
Spring Airlines is set to increase its total capacity for international flights from 20% in 2014 to 30% this year, and Air Asia as its international operation expands.
China’s low-cost carrier (LCC) Spring Airlines is set to increase its total capacity for international flights from 20% in 2014 to 30% this year, and will eventually take on LCC giant Air Asia as its international operation expands, according to the carrier’s PR department head Yi Mao.
Spring Airlines shares only the Suzhou-Bangkok route with Air Asia for now, and although has a larger market value than its regional rival it can't match its fleet size, said Spring Airlines' spokesperson Wuan Zhang.
Malaysia-based Air Asia is currently the leading LCC in Asia with a fleet of 150 aircraft and 200 new A320neo models on order. In contrast, Spring Airlines’ fleet has only 46 A320 aircraft, set to expand to 60 by the end of this year and 100 by the end of 2018.
Spring Airlines has begun developing Shenzhen as its South China hub since 2014,and it has increased the number of planes making overnight layovers in Shenzhen from one in 2013 to six currently, according to Mr. Mao.
“Shenzhen is a perfect transit point to connect mainland passengers to Hong Kong and Macau,” he said. Shenzhen Airport’s operations GM Qiang Long said the airport is planning to build an LCC terminal. “We can also develop more routes depending on our capacity,” he said.
In the recently announced financial results for 2014, Spring Airlines’ net profit was up 20.75% to top RMB884 million (approx: US$143 million), thanks to lower fuel prices since June 2014 and effective cost control. Earning per share was up 20.9% at RMB2.95.
The biggest increase in earning was from international routes, including to Hong Kong, Macau and Taiwan, though its domestic operational revenue accounted for 80.31% of the total operational revenue of RMB7.04 billion (approx: US$1.14 billion). Income from Spring Airlines’ international routes surged 63.13%, far higher than the 11.11% total revenue growth. Of the RMB704 million (approx: US$114 million) increase in total revenue, 53% was from international operations.
Spring Airlines also enjoyed 46.18% increase in additional revenue, to RMB415 million (approx: US$67 million), from paid cabin services, related product sales and value-added services such as hotel, car rental rail tickets. The average gross profit margin was 85.13%.
The viability of the LCC sector is attracting more players – 9Air made its maiden flight in December 2014 from its base in Guangzhou Baiyun Airport, and China United Airlines and HNA West Air are also set to launch LCC services on March 29 .(Translation by David)