Oil price slump increases earnings for Chinese carriers
The huge dip in international crude prices helped lower operational costs and contribute to healthy bottom-lines for China’s carriers.
The huge dip in international crude prices helped lower operational costs and contribute to healthy bottom-lines for China’s carriers. Air China and China Eastern Airlines have recorded profit of RMB1.6-1.8 billion (approx: US$258-291 million) and RMB1.5-1.6 billion (approx: US$242-258 million)respectively in the first quarter of 2015.
Air China said the growth was achieved as it rode on the momentum of the Spring peak season and optimized its production structure as well as added capacity to meet market demand. On the other hand, costs were reduced as the airline improved efficiency, upgraded its aircraft models and air routes network and constantly explored potential cost saving with thelowering fuel cost.
China Eastern said it benefited from the drop in international oil prices and increased travel demand arising from the Chinese government’s economic restructuring. As the company enhanced its operational capacity and maintained its market position and Spring Festival transportation capacity, the carrier achieved record capacity during the Spring peak season.
IATA’s predicts the oil prices will continue to drop this year, with the average annual price for Brent Crude at US$85 per barrel. An industry observers said: “China’s aviation industry will see a turning point in 2015 as oil prices will continue dropping throughout the year while the RMB exchange rate further stabilizes and help boost airlines’ earnings.”(Translation by David)