AsiaPacific - Airlines

MarketLine Industry Profile
Airlines in Asia-
Pacific
May 2015
Reference Code: 0200-0756
Publication Date: May 2015
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EXECUTIVE SUMMARY
Market value
The Asia-Pacific airlines industry grew by 9.9% in 2014 to reach a value of $188,486.2 million.
Market value forecast

In 2019, the Asia-Pacific airlines industry is forecast to have a value of $315,873.4 millio n, an increase of 67.6% since
2014.
Market volume
The Asia-Pacific airlines industry grew by 7.2% in 2014 to reach a volume of 1,070.1 million passengers.
Market volume forecast

In 2019, the Asia-Pacific airlines industry is forecast to have a volume of 1,534.5 million passengers, an increase of
43.4% since 2014.
Category segmentation
Domestic is the largest segment of the airlines industry in Asia -Pacific, accounting for 69.6% of the industry's total
volume.
Geography segmentation
China accounts for 34.7% of the Asia-Pacific airlines industry value.
Market rivalry
The fixed costs associated with an airline, from the aircraft, fuel, skilled and unskilled staff, insurance, to airport fees,
duties and taxes, ensures rivalry remains heated as airlines fight to protect their profit margins while maintaining and
growing revenues.

TABLE OF CONTENTS
Executive Summary..........................................................................................................................................................................2
Market value ..................................................................................................................................................................................2
Market value forecast...................................................................................................................................................................2
Market volume...............................................................................................................................................................................2
Market volume forecast ...............................................................................................................................................................2
Category segmentation................................................................................................................................................................2
Geography segmentation ............................................................................................................................................................2
Market ri valry .................................................................................................................................................................................2
Market Overview ...............................................................................................................................................................................7
Market definition............................................................................................................................................................................7
Market analysis .............................................................................................................................................................................7
Market Data........................................................................................................................................................................................9
Market value ..................................................................................................................................................................................9
Market volume.............................................................................................................................................................................10
Market Segmentation .....................................................................................................................................................................11
Category segmentation..............................................................................................................................................................11
Geography segmentation ..........................................................................................................................................................12
Market Outlook ................................................................................................................................................................................13
Market value forecast.................................................................................................................................................................13
Market volume forecast .............................................................................................................................................................14
Five Forces Analysis ......................................................................................................................................................................15
Summary......................................................................................................................................................................................15
Buyer power.................................................................................................................................................................................16
Supplier power ............................................................................................................................................................................18
New entrants ...............................................................................................................................................................................20
Threat of substitutes...................................................................................................................................................................22
Degree of rivalry..........................................................................................................................................................................24
Leading Companies........................................................................................................................................................................26

Air China Limited.........................................................................................................................................................................26
AN A Holdings Inc........................................................................................................................................................................29
China Eastern Airlines Corporation Limited ...........................................................................................................................32
China Southern Airlines Company Limited.............................................................................................................................35
Methodology ....................................................................................................................................................................................38
Industry associations..................................................................................................................................................................39
Related MarketLine research....................................................................................................................................................39
Appendix...........................................................................................................................................................................................40
About MarketLine........................................................................................................................................................................40

LIST OF TABLES
Table 1: Asia-Pacific airlines industry value: $ million, 2010–14...............................................................................................9
Table 2: Asia–Pacific airlines industry volume: million passengers, 2010–14 ......................................................................10
Table 3: Asia–Pacific airlines industry category segmentation: million passengers, 2014 .................................................11
Table 4: Asia–Pacific airlines industry geography segmentation: $ million, 2014 ................................................................12
Table 5: Asia-Pacific airlines industry value forecast: $ million, 2014–19 .............................................................................13
Table 6: Asia–Pacific airlines industry volume forecast: million passengers, 2014 –19.......................................................14
Table 7: Air China Limited: key facts ...........................................................................................................................................26
Table 8: Air China Limited: key financials ($) .............................................................................................................................27
Table 9: Air China Limited: key financials (CNY).......................................................................................................................27
Table 10: Air China Limited: key financial ratios ........................................................................................................................27
Table 11: ANA Holdings Inc.: key facts .......................................................................................................................................29
Table 12: ANA Holdings Inc.: key financials ($).........................................................................................................................30
Table 13: ANA Holdings Inc.: key financials (¥).........................................................................................................................30
Table 14: ANA Holdings Inc.: key financial ratios ......................................................................................................................30
Table 15: China Eastern Airlines Corporation Limited: key facts ............................................................................................32
Table 16: China Eastern Airlines Corporation Limited: key financials ($)..............................................................................33
Table 17: China Eastern Airlines Corporation Limited: key financials (CNY) .......................................................................33
Table 18: China Eastern Airlines Corporation Limited: key financial ratios...........................................................................33
Table 19: China Southern Airlines Company Limited: key facts .............................................................................................35
Table 20: China Southern Airlines Company Limited: key financials ($) ...............................................................................36
Table 21: China Southern Airlines Company Limited: key financials (CNY).........................................................................36
Table 22: China Southern Airlines Company Limited: key financial ratios ............................................................................36

LIST OF FIGURES
Figure 1: Asia-Pacific airlines indus try value: $ million, 2010–14 .............................................................................................9
Figure 2: Asia–Pacific airlines industry volume: million passengers, 2010–14.....................................................................10
Figure 3: Asia–Pacific airlines industry category segmentation: % share, by volume, 2014..............................................11
Figure 4: Asia–Pacific airlines industry geography segmentation: % share, by value, 2014 .............................................12
Figure 5: Asia-Pacific airlines industry value forecast: $ million, 2014–19............................................................................13
Figure 6: Asia–Pacific airlines industry volume forecast: million passengers, 2014 –19 .....................................................14
Figure 7: Forces driving competition in the airlines industry in Asia-Pacific, 2014...............................................................15
Figure 8: Drivers of buyer power in the airlines industry in Asia-Pacific, 2014 .....................................................................16
Figure 9: Drivers of supplier power in the airlines industry in Asia -Pacific, 2014 .................................................................18
Figure 10: Factors influencing the likelihood of new entrants in the airlines industry in Asia -Pacific, 2014 ....................20
Figure 11: Factors influencing the threat of substitutes in the airlines industry in Asia -Pacific, 2014...............................22
Figure 12: Drivers of degree of rivalry in the airlines industry in Asia -Pacific, 2014 ............................................................24
Figure 13: Air China Limited: revenues & profitability ...............................................................................................................28
Figure 14: Air China Limited: assets & liabilities ........................................................................................................................28
Figure 15: ANA Holdings Inc.: revenues & profitability .............................................................................................................31
Figure 16: ANA Holdings Inc.: assets & liabilities ......................................................................................................................31
Figure 17: China Eastern Airlines Corporation Limited: revenues & profitability ..................................................................34
Figure 18: China Eastern Airlines Corporation Limited: assets & liabilities...........................................................................34
Figure 19: China Southern Airlines Company Limited: revenues & profitability ...................................................................37
Figure 20: China Southern Airlines Company Limited: assets & liabilities ............................................................................37

MARKET OVERVIEW
Market definition
The airlines indus try comprises passenger air transportation, including both scheduled and chartered, but excludes air
freight transport. Industry volumes are defined as the total number of revenue passengers carried/enplaned (departures)
at all airports within the specified country or region, excluding transit passengers who arrive and depart on the same
flight code. For the US and Canada, transborder passengers departing from either country are considered as part of the
international segment. Industry value is defined as the total revenue obtained by airlines from transporting these
passengers. This avoids the double-counting of passengers. All currency conversions in this profile were carried out
using constant 2014 average annual exchange rates.
For the purposes of this report, North America consists of Canada, Mexico, and the United States.
South America comprises Argentina, Brazil, Chile, Colombia, and Venezuela.
Europe comprises Austria, Belgium, the Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy,
Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden, Switzerland, Turkey, and the United Kingdom.
Scandinavia comprises Denmark, Finland, Norway, and Sweden.
Asia-Pacific comprises Australia, China, Hong Kong, India, Indonesia, Kazakhstan, Japan, Malaysia, New Zealand,
Pakistan, Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam.
Middle East comprises Egypt, Israel, Saudi Arabia, and United Arab Emirates.
Market analysis
The Asia-Pacific region's airline industry has demonstrated remarkable growth across the 2010-2014 period in terms of
both revenues and passengers carried. Forecasts for the 2014-2019 period suggest passenger and revenue growth will
both accelerate to varying degrees.
The Asia-Pacific airlines industry had total revenues of $188,486.2m in 2014, representing a compound annual growth
rate (CAGR) of 9.3% between 2010 and 2014. In comparison, the Chinese industry increased with a CAGR of 11.4%,
and the Japanese industry declined with a compound annual rate of change (CARC) of -0.2%, over the same period, to
reach respective values of $65,483.7m and $23,702.3m in 2014.
Industry consumption volumes increased with a CAGR of 7.3% between 2010 and 2014, to reach a total of 1,070.1
million passengers carried in 2014. The industry's volume is expected to rise to 1,534.5 million passengers carried by the
end of 2019, representing a CAGR of 7.5% for the 2014-2019 period.
In 2014, Southeast Asia’s airline industry suffered an unprecedented number of tragedies. Three passenger je ts from
airlines based in the Asia-Pacific region went down with no survivors. The airplanes involved were two Malaysia Airlines
flights (MH370 and MH17), and one Indonesia AirAsia flight (QZ8501). MH370 disappeared on March 8, 2014 while
travelling from Kuala Lumpur, Malaysia to Beijing, China. At the time of writing, it was yet to be found. MH17 was flying
from Amsterdam, Netherlands, to Kuala Lumpur and was shot down by suspected Russian forces or their proxies while
flying over Ukraine on July 17, 2014, all on board were killed. AirAsia's QZ8501 was lost en route from Surabaya,
Indonesia to Singapore on 28 December 2014. The aircraft stalled during an abnormally steep climb, with the resultant
crash into the Java Sea killing all on board.
Furthermore, on February 4, 2015, Taiwanese airline TransAsia Airways' flight GE235 was lost after it crashed into the
Keelung River shortly after take-off from Taipei Songshan Airport, there were 43 fatalities and 17 injuries. A few months
prior to the GE235 accident, TransAsia Airways flight GE222 crashed into buildings during its approach to land in bad
weather at Magong Airport, Penghu Island, Taiwan on July 23, 2014, there were 48 fatalities and 15 injuries.

These incidents can have a short term impact on the airline involved, and may have a slight impact on other airlines
operating in the country of origin of the affected airline. However, as with other systemic shocks, the long -term impact of
such tragedies is minimal to the airline industry as a whole, with passenger numbers recovering shortly after incidents.
According to data from the World Travel & Tourism Council, international tourist arrivals in the Asia -Pacific region have
seen strong growth since 2009. Furthermore, expenditure on outbound travel increased from $202.5bn in 2009 to
$340.0bn in 2014, an increase of 67.9%. As the data shows, the Asia -Pacific region's airline industry has been a
significant beneficiary of the uptick in tourist arrivals and increased spending on outbound travel.
The domestic segment was the industry's largest in 2014, with a total of 744.3m passengers carried, equivalent to 69.6%
of the industry's overall volume. The international segment was responsible for 325.8m passengers in 2014, equating to
30.4% of the industry's aggregate volume.
The performance of the industry is forecast to accelerate, with an anticipated CAGR of 10.9% for the five -year period
2014 - 2019, which is expected to drive the industry to a value of $315,873.4m by the end of 2019. Comparatively, the
Chinese and Japanese industries will grow with CAGRs of 13.1% and 4.7% respectively, over the same period, to reach
respective values of $121,341.8m and $29,787.3m in 2019.

MARKET DATA
Market value
The Asia-Pacific airlines industry grew by 9.9% in 2014 to reach a value of $188,486.2 million.
The compound annual growth rate of the industry in the period 2010 –14 was 9.3%.
Table 1: Asia-Pacific airlines industry value: $ million, 2010–14
Year $ million € million % Growth

2010 131,833.3 99,197.4
2011 144,811.5 108,962.7 9.8%
2012 162,060.1 121,941.4 11.9%
2013 171,478.3 129,028.0 5.8%
2014 188,486.2 141,825.6 9.9%
CAGR: 2010–14 9.3%
SOURCE: MARKETLINE M AR KE TL IN E
Figure 1: Asia-Pacific airlines industry value: $ million, 2010–14

Market volume
The Asia-Pacific airlines industry grew by 7.2% in 2014 to reach a volume of 1,070.1 million passengers.
The compound annual growth rate of the industry in the period 2010–14 was 7.3%.
Table 2: Asia–Pacific airlines industry volume: million passengers, 2010–14
Year million passengers % Growth

2010 805.9
2011 855.9 6.2%
2012 920.5 7.5%
2013 998.5 8.5%
2014 1,070.1 7.2%
CAGR: 2010–14 7.3%
Figure 2: Asia–Pacific airlines industry volume: million passengers, 2010–14

MARKET SEGMENTATION
Category segmentation
Domestic is the larges t segment of the airlines industry in Asia-Pacific, accounting for 69.6% of the industry's total
volume.
The International segment accounts for the remaining 30.4% of the industry.
Table 3: Asia–Pacific airlines industry category segmentation: million passengers, 2014
Category 2014 %
Domestic 744.3 69.6%
International 325.8 30.4%
Total 1,070.1 100%
Figure 3: Asia–Pacific airlines industry category segmentation: % share, by volume, 2014

Geography segmentation
China accounts for 34.7% of the Asia-Pacific airlines industry value.
Japan accounts for a further 12.6% of the Asia-Pacific industry.
Table 4: Asia–Pacific airlines industry geography segmentation: $ million, 2014
Geography 2014 %
China 65,483.7 34.7
Japan 23,702.3 12.6
South Korea 15,889.4 8.4
India 8,253.2 4.4
Rest of Asia-Pacific 75,157.6 39.9
Total 188,486.2 100%
Figure 4: Asia–Pacific airlines industry geography segmentation: % share, by value, 2014

MARKET OUTLOOK
Market value forecast
In 2019, the Asia-Pacific airlines industry is forecast to have a value of $315,873.4 million, an increase of 67.6% since
2014.
The compound annual growth rate of the industry in the period 2014 –19 is predicted to be 10.9%.
Table 5: Asia-Pacific airlines industry value forecast: $ million, 2014–19
Year $ million € million % Growth

2014 188,486.2 141,825.6 9.9%
2015 208,406.3 156,814.4 10.6%
2016 231,305.4 174,044.7 11.0%
2017 256,493.3 192,997.2 10.9%
2018 284,682.4 214,208.0 11.0%
2019 315,873.4 237,677.5 11.0%
CAGR: 2014–19 10.9%
Figure 5: Asia-Pacific airlines industry value forecast: $ million, 2014 –19

Market volume forecast
In 2019, the Asia-Pacific airlines industry is forecast to have a volume of 1,534.5 million passengers, an increase of
43.4% since 2014.
The compound annual growth rate of the industry in the period 2014 –19 is predicted to be 7.5%.
Table 6: Asia–Pacific airlines industry volume forecast: million passengers, 2014–19
Year million passengers % Growth

2014 1,070.1 7.2%
2015 1,153.3 7.8%
2016 1,241.1 7.6%
2017 1,332.9 7.4%
2018 1,430.4 7.3%
2019 1,534.5 7.3%
CAGR: 2014–19 7.5%
Figure 6: Asia–Pacific airlines industry volume forecast: million passengers, 2014 –19

FIVE FORCES ANALYSIS
The airlines market will be analyzed taking airline companies as players. The key buyers will be taken as individuals for
leisure and business, and to a lesser extent corporate customers, and fuel suppliers, airports, aircraft manufacturers, and
skilled and unskilled employees as the key suppliers.
Summary
Figure 7: Force s driving competition in the airlines industry in Asia -Pacific, 2014
The fixed costs associated with an airline, from the aircraft, fuel, skilled and unskilled staff, i nsurance, to airport fees,
growing revenues.
Typically, a majority of buyers in the airline industry are individual customers purchasing tickets for scheduled flights.
Buyer power from this type of customer is minimal due to the sheer volume of passengers, while their smaller size
restricts their ability to negotiate prices. In regards to supplier power, the number of suppliers necessary for the
successful operation of an airline is extensive and diverse, offering a complex array of services and products.
New entrants are faced with high entry barriers, although there are alternative cost savings available in the form of
leased aircraft. Substitutes to the airline industry are numerous and include road vehicles such as cars, buses or
coaches, railroads and ferries for domestic and regional travel, and ocean going vessels such as cruise ships, or
passenger berths on cargo ships for journeys crossing large spans of open water. All come with respective advantages
and disadvantages depending on the type of journey being made.

Buyer power
Figure 8: Drivers of buyer power in the airlines industry in Asia -Pacific, 2014
Typically, a majority of buyers in the airline industry are individual customers purchasing tickets for scheduled flights.
Buyer power from this type of customer is minimal due to the sheer volume of passengers, almost 1.1 billion passengers
were carried (via departures) in the Asia-Pacific region during 2014, while their smaller size restricts their ability to
negotiate prices. However, for airlines offering chartered passenger flights, customers generally tend to be wealthy
individuals or corporate clients. In this case, individual customers or corporations exercise a greater degree of buyer
power due to their high value and negotiating position, and their limited number in relation to the smaller size of the
chartered flights market.
Switching costs can be costly once a ticket has been purchased. For scheduled flights, an airline isn't obliged to refund a
ticket if it is a nonrefundable fare and is cancelled by the customer, although they may be allowed to apply the fare from
the cancelled ticket to a future flight with the same airline. However, refundable tickets are available which can be
returned for a refund to a customer's debit or credit card, although some airlines charge an airline service fee to process
a refund.
These caveats to the purchase of an airline ticket can be detrimental to buyer power. However, due to the nature of
airlines offering customers one off flights, customers will often switch between airlines particularly in lieu of pricier fares
compared to rival airlines, increasing buyer power. To counter this, many airlines run frequent-flyer programs offering
regular flyers the opportunity to earn free flights among other incentives.
Many customers, particularly infrequent flyers, take advantage of online price comparison websites and mobile apps,
selecting whichever airline offers the cheapest deal. Passengers flying coach class or on short-haul flights are ordinarily
incentivized by price, as such loyalty is minimized due to the extensive use of s aid price comparison sites and apps,
resulting in increased buyer power. This phenomenon has also seen low cost carriers steal market share from pricier
incumbents.
Contrary to this, customers flying business or first class may be more concerned with the level of service offered than the
price of tickets, reducing the likelihood of switching and price sensitivity, resulting in reduced buyer power.

Airlines are restricted in the level of differentiation they offer. Coach class is largely the same from airlin e to airline, with
minor differences including leg space, in-flight entertainment and in-flight meals. Low cost carriers offer even less
product/service differentiation, providing the absolute basics in order to protect slim profit margins. This is favorable for
passengers as it allows them to focus on price when choosing an airline. When it comes to business and first class,
product and service differentiation is more palpable and often engenders a greater degree of loyalty, which swings buyer
power in the airline's favor. One way in which an airline can differentiate itself is the routes and destinations it offers to
customers. If an airline offers flights to a destination its primary rivals don't (due to factors such as the denial of
cabotage), or offers flights via an exclusive route, then this level of differentiation diminishes buyer power.
Although often a necessity in terms of journey times, convenience and cost, airlines are not indispensable due to
alternative available transportation methods, increasing buyer power. However, this is stymied somewhat by the low
likelihood of customers backward integrating and providing their own air transport (although private pilot licenses and
airplane ownership is not uncommon, so it isn't impossible).
Overall, buyer power is assessed as moderate.

Supplier power
Figure 9: Drivers of supplier power in the airlines industry in Asia -Pacific, 2014
The number of suppliers necessary for the successful operation of an airline is extensive and diverse, offering a complex
array of services and products. One of the primary suppliers is personnel, ranging from skilled workers such as pilots,
aircraft maintenance, repair and overhaul (MRO) engineers and air traffic controllers, to un-skilled workers such as
ground handling and catering staff, cabin crews and check-in staff.
In regards to skilled staff, although the size of suppliers is limited (i.e. a single person providing their skills), the num ber
of suppliers is restricted due to the smaller pool of talent industry players have to pick from. This is the result of a number
of factors including the finite number of people with the necessary attributes to become a successful pilot, air traffic
controller or MRO engineer etc. Switching costs for these particular suppliers can be costly due to high wages and
employment contracts. Furthermore, both skilled and unskilled personnel are protected by unions which further increase
supplier power due to the disruption and damage union members can inflict in response to unfavorable actions from
industry players.
One of the most visible aspects of an airline is its aircraft. Airlines must enter into contracts when buying or leasing
aircraft from suppliers. Breaking these contracts can often incur a heavy financial cost. Furthermore, Boeing and Airbus
effectively form a duopoly of suppliers of new jetliners, especially in the large jetliner category with airplanes such as the
new Boeing 787 Dreamliner or the new Airbus A380 (the world's largest passenger airliner). As such, Boeing and Airbus
wield significant influence and power when dealing with airline companies. Industry players in the market for lower -
capacity regional jets and propeller-driven aircraft ordinarily have dealings with companies such as Embraer, ATR, and
Bombardier. Although significant suppliers, they don't yield the influence of the much larger Boeing and Airbus.
Furthermore, the larger number of suppliers of smaller aircraft decreases supplier power somewha t.
Suppliers of aviation fuel are of vital importance to airlines, with relatively few companies supplying aviation fuel which
strengthens supplier power.
Fuel and crude oil supply make up a major part of any airline's costs, with increases in ticket pric es usually reflective of
rising fuel costs, although airlines generally defend against oil price rises using hedging strategies.

In 2014, the International Air Transport Association (IATA) estimates fuel costs to have represented 28.6% of total
operating costs for the global airline industry at a total of $204 billion. This is a decrease of $4 billion over 2013, primarily
due to the well-publicized fall in oil prices but also the increase in more fuel efficient modern aircraft. IATA forecasts total
fuel costs will continue to fall to $192 billion (26.1% of total operating costs) for the industry during 2015.
Airports also supply a significant amount of infrastructure and services. Airlines rely upon airports for time slots to take -
off and land. They rely upon the infrastructure provided by airports to collect, deliver and process passengers, luggage
and cargo. They also provide storage for aircraft not in use, and essential air traffic control services. Due to the absolute
necessity to an airline's operations, airports and the authorities and companies that operate them wield significant
supplier power.
Typically, the size of suppliers to the airline industry are significant (excluding individual personnel making up an airline 's
workforce) which makes them difficult to influence, and favors the supplier when players are negotiating with them.
Equally, the limited number of suppliers (barring unskilled workers) forces players to develop relationships with suppliers
who have a negotiating advantage.
Switching costs in terms of personnel can be costly if a worker's union becomes involved. In terms of the supply of
tangible assets such as aircraft and aviation fuel, switching costs can be even more substantial as contracts are used to
protect suppliers. The cost of contract breaches are high enough for an industry player to ordinarily ensure they adhere
to contract requirements, thus switching from supplier to supplier is difficult and costly.
Industry players are not likely to backward integrate into aircraft manu facturing or fuel supply. Although major airlines
may provide in-house training to pilots and cabin crew, and often own subsidiaries which provide catering, MRO and
ground handling services (air traffic controllers are provided by airports), personnel as an entity are entirely independent
of the companies that employ them so it is not possible to integrate in this respect. This favors suppliers.
However, supplier power is restricted by the improbability of forwards integration into the airline industry (alt hough not
impossible in terms of personnel as an individual such as a pilot may set up a chartered air transport service on a small
scale). In addition, although a company like Boeing has alternative sources of revenue, notably in defense, space and
security, civil a viation remains a very significant part of its business. In 2014, Boeing generated around 66% of total
revenues from its global commercial airplanes division, with its defense, space and security division accounting for a
majority of the remaining revenues. If a supplier lacks diversity it is more dependent on airlines as customers, weakening
its influence.
Commonly, airlines are forming alliances with one another, not only to achieve network size economies through code
sharing, but also to achieve scale economies in the purchase of fuel, and even of aircraft. Combining forces to make
purchases serves to increase the industry players' bargaining power and therefore reduces supplier power. A vast tide of
consolidation in recent years has to some extent helped to protect airlines from supplier power, as large conglomerate
airline companies have a much stronger bargaining position than smaller ones due to scope and market share.
However, the relative lack of alternative manufacturers or substitute inp uts increases supplier power. Furthermore, in an
industry where reliability and safety are critical, the quality of the planes and their maintenance are highly important;
another factor that boosts supplier power.
A further factor favoring suppliers is the lack of viable and practical alternative inputs, although some are emerging: for
instance, British Airways has committed to buying large amounts of green jet fuel, created from converted waste. Unlike
other modes of transport, airlines have no reliable current alternative source of energy.
Overall, supplier power is assessed as moderate.

New entrants
Figure 10: Factors influencing the likelihood of new entrants in the airlines industry in Asia -
Pacific, 2014
The economic entry barriers to the airline industry can be high; however there are alternative cost savings available to
new entrants. Initial fixed costs include the up-front outlay needed to obtain airplanes whether through leasing or
purchase. However, for a new airline, the purchase of an aircraft is not usually cost effective. The acquisition of an
aircraft subject to a lease arrangement is generally seen as more cost effective for an entirely new entrant.
Airlines can obtain new aircraft through two main types of leasing, wet and dry, with a combination of the two also
possible. A wet lease is when an airline provides a new airline or service with an aircraft, complete crew, maintenance,
and insurance (ACMI) for a fee. The new airline or service, the lessee, pays for fuel, airport fees and all other duties and
taxes in addition to the cost of the lease. Typically, wet leases last from one month to two years, and can be switched to
a dry lease once the new service has been established and the airline's own flight and cabin crews have been trained.
A dry lease is when an aircraft financing company such as GE Capital Aviation Services (GECAS) leases aircraft to
airlines without insurance, crew, and maintenance etc. Major airlines can also come to dry lease agreements with other
airlines. For example, a major airline may provide the aircraft and a regional airline provide crew etc. which allows the
aircraft to be operated under the major airline's name, drastically reducing the associated hiring and training costs
personnel needed to fly and maintain an aircraft.
The leasing system particularly favors entirely new entrants, allowing them to establish a new service with a single
aircraft and avoiding the pitfalls associated with purchasing an aircraft and gaining a pricey fixed asset.
For existing airlines looking to offer flights to a new country or region, or launching a new service or subsidiary such as a
low-cost carrier, leasing is also favorable until it has been established whether o r not the route or service is financially
viable. If the airline is looking to purchase an aircraft for a new route or service, it is likely they already have fa vorabl e
terms with aircraft providers, or indeed are able to redeploy part of their existing fl eet. Equally, an existing airline
establishing a new service will be able to exploit scales of economies and relationships with aviation fuel suppliers,
whereas an entirely new entrant with a single aircraft or very small fleet may find fuel costs more exp ensive. As such, all
of these factors in terms of fixed costs are not as prohibitively e xpensive as would be ordinarily expected, although are
still considerable.

Distribution is not particularly easy, as new players need to establish an online booking sys tem, and relationships with
travel agents and other sales intermediaries. It is also vital to obtain airport ‘slots’ for take -off and landing.
There has been substantial growth in air traffic over recent years; as a result congestion at airports in many c ountries is
expected, especially at major hubs. The time slot given to an airline is important, and is something all airlines negotiate
with airports. Established airlines may already hold a monopoly over slots at certain airports, making it harder for new
airlines to infiltrate. This creates difficulties for a new airline aiming to negotiate prime slots at busy airports and can
result in it being restricted to offering off-peak flight times, or having to fl y to airports further away from popular
destinations. On many occasions the new company cannot afford to pay the significant fees to airports for service
charges, forcing them to either choose other destinations or draw back from or avoid a particular market until they have
become more established. This can be a deterrent to new airlines, as customers may seek more convenient alternatives.
While there is some debate as to whether traditional scale economies are significant in this industry, it seems likely that
being able to offer a wide range of routes is advantageous. The larger airlines achieve this not only through their own
fleet, but through code sharing agreements with other carriers in airline alliances such as the Star Alliance, oneworld and
SkyTeam; however, a new entrant will not necessarily be approved for membership although they may be able to
individually negotiate partnerships and code sharing agreements with airlines.
Regulation forms an additional barrier as well. The various national and international civil aviation authorities regulate
areas such as safety, environmental impact, airspace usage, and passenger rights. If an airline does not provide safety
oversight in accordance with the minimum safety oversight standards established by the International Civil Aviation
Organization (ICAO), then that airline can be banned from a country or region's airspace. As such, compliance raises the
cost of entry for a new airline, and if it is banned from certain airspace its area of operations and ability to generate
revenues will become severely impeded.
Furthermore, the airline industry has other additional regulatory issues to consider. Cabotage is the provision of domestic
transport services in a country by companies based in a different country. Airline cabotage is generally forbidden, unless
explicitly permitted by an agreement between two or more countries. For example, cabotage by any EU -based carrier is
permitted in any other EU-country; also, the Open Skies agreement accords cabotage rights to US carriers in the EU.
This liberalization should increase the opportunities for market access in this region. However, in other countries
cabotage is generally not possible, and in some cases foreign ownership of domestic airlines is also restricted to a
certain percentage.
Industry growth across 2009-2014 was very strong which can be construed as an incentive to potential new entrants.
Overall, the threat posed by potential new entrants is assessed as moderate.

Threat of substitutes
Figure 11: Factors influencing the threat of substitute s in the airlines industry in Asia -Pacific, 2014
Although airlines provide an important service, alternative transport methods are available. Road vehicles such as cars,
buses or coaches are a viable means for many, as are railroads and ferries for domestic and regional travel. Ocean
going vessels such as cruise ships, or passenger berths on cargo ships, are also alternatives for journeys crossing large
spans of open water, such as transatlantic crossings.
For business travel, alternatives include ‘virtual meetings’ via videoconferencing and similar technologies. The switching
costs here are the cost of the equipment required, although at present it is not clear how completely such technologies
will replace face-to-face meetings.
When planning a journey, buyers take into account not only the cost of tra vel but also the duration of the journey and
convenience of the available methods of transit when comparing different forms of transportation.
In larger countries, air travel makes it easier to overcome long distances and has certain benefits such as shorter travel
time than rail or car travel, even when including the time to check in. However, in smaller countries, domestic air travel
may not be so appropriate, and rail and road transportation become more attractive alternatives, with some countries
such as Singapore offering no or very limited scheduled domestic passenger flights due to their small size. It is possible
to travel around much of the world by long-distance bus or train, although levels of service vary, and some border
crossings may present a difficulty.
Other than cross-border land transport to Canada and South America, there are few substitutes for international air travel
in the US. Its geography isolates it from Europe and Asia-Pacific, and marine passenger transportation is essentially
restricted to leisure cruises and small-scale passenger transportation on cargo ships. For transatlantic crossings, there
are few, if any, beneficial substitutes to air travel unless passengers want a leisure cruise.
For countries and regions with well-developed land transport infrastructure, such as Europe and Japan, domestic flights
(defined as flights beginning and ending in the same country) can easily be substituted by car, bus, or rail.

In the Asia-Pacific region, domestic flights can be substituted by car, bus, or rail. International air travel is generally less
vulnerable to road and rail substitution in this region. Japan, Australia, and Taiwan are islands with no links to mainland
Asia, and land access from the South Korean peninsula to the rest of the continent is complicated by the need to travel
via North Korea. Singapore is connected by a road and rail bridge to Malaysia. Travel from the more developed regions
of China to the west is technically possible over land, but the distances make this impractical. In contrast, international
land travel in Europe is serviced by dense road and rail infrastructure, and is a more significant substitute to air travel in
that region. Cross -border land transport, including high speed trains in several countries, means that many international
flights can be substituted in this region.
Substitute transport methods are very much dependent on the destination as to their validity as an alternative to flights.
Geography, infrastructure, distance and location of journey origin and destination are additional factors which can
influence this validity.
Cost is another major factor, and the low switching costs can be deemed bene ficial to substitute transport methods,
however the advent of low-cost airlines has seen many journeys, which would have been cheaper by train, car or ferry,
now cheaper via low-cost airlines.
Overall, the threat from substitutes is assessed as moderate, although this will vary depending on the type and length of
journey, as well as factors such as infrastructure.

Degree of rivalry
Figure 12: Drivers of degree of rivalry in the airlines industry in Asia -Pacific, 2014
The competitive landscape of the Asia-Pacific region is typified by the presence of large companies, such as ANA
Holdings and Air China, operating alongside smaller regional and domestic competitors.
The size of competitors in the airline industry can vary massively depending on which market a player operates in, for
example independent regional and domestic airliners are typically smaller than those serving international markets.
Another factor to consider is the prevalence of codeshare agreements, partnerships and alliances. Airline alliances in
particular can significantly increase a competitor's size merely through association, creating fierce competition amongst
members of rival alliances.
The number of players serving a market can be significant. In addition to domestic airline companies, usually with at
least one large flag carrier, airlines have to contend with rival foreign airlines offering flights to and from their home
market. However, airlines offering internal domestic flights are protected from cabotage as it is generally forbidden
unless permitted by an agreement between two or more countries. For example, cabotage by any EU -based carrier is
permitted in any other EU-country; also, the Open Skies agreement accords cabotage rights to US carriers in the EU.
Low-cost switching facilitated by price comparison websites and mobile apps, and a general lack of differentiation
(primarily in regards to coach class), also fuels rivalry as buyers switch from airline to airline on the basis of price.
The fixed costs associated with an airline, from the aircraft, fuel, skilled and unskilled staff, insurance, to airport fees,
growing revenues. For long-haul and night flights, airlines have to provide their cabin crew and pilots with
accommodation which can become costly for larger companies. Aircraft are stored in hangars and maintenance bays
when not in use which can also be costly. Furthermore, the storage of MRO equipment and the necessity for a
maintenance bay for airlines which have integrated MRO services also adds to costs.

The ability to expand tempers rivalry somewhat as airlines have a number of options a vailable to them. They can e xpand
the number of different routes they service, or they can expand the number of flights they run to a destination. Once the
type of e xpansion has been decided, airlines can decide if they are going to achieve their expansion plans through
codeshare agreements, partnerships or trying to join an airline alliance. When it comes to the more practical aspects of
expansion such as a need for more aircraft and staff, again an airline has several options; they can purchase an aircraf t
either new or used, or take out a wet or dry lease.
The relative ease with which airlines can exit the industry also helps alleviate rivalry as leases on airplanes can be
cancelled, and owned planes can be sold to rival airlines or new/smaller airlines looking to purchase cheaper used
aircraft. Contracts with airports and fuel suppliers etc. can also be cancelled.
However, the general lack of diversity for airlines can be problematic as rival airlines have little to differentiate
themselves from one another. Airlines are generally restricted to differentiation in the level of service they offer to their
business and first class passengers, e.g. airport lounges and in -flight services. Coach class ordinarily offers the same
degree of service across most airlines. Low-cost carriers differentiate themselves on price, offering absolute basic levels
of service to customers, charging extra for items and services that are normally inclusive of the price of a ticket for
regular carriers. Many airlines offer charter flights and air cargo transport services, with some also offering complete
vacation packages. However, companies offering these vacation packages are the exception to the rule and the lack of
diversity among airlines (essentially all airlines offer the s ame core product, the air transportation of passengers) creates
a reliance on the airline industry which results in fierce competition.
The degree of similarity amongst industry players contributes to an alleviation in rivalry. As airlines have similar business
models and structures, behavior from rival airlines is easier for competitors to predict.
This is offset by significant storage costs in the airline industry. A seat on a flight can only be sold up to a particular t ime:
once the plane leaves the ground, there is no way to generate revenue from an empty seat. This is analogous to the
situation in food retail where a product that is too old becomes unsellable, and is reflected in the high score for storage
costs.
The very strong performance of the airline industry in the Asia-Pacific in recent years contributes to the assuagement of
rivalry, although this may differ country-to-country.
Overall, rivalry in the global airline industry is assessed as moderate.

LEADING COMPANIES
Air China Limited
Table 7: Air China Limited: key facts
Blue Sky Mansion, 28 Tianzhu Road, Airport Economic Development

Head office:
Zone, Shunyi District, Beijing 101312, CHN
Telephone: 86 10 6146 2799
Fax: 86 10 6146 2805
Website: www.airchina.com.cn
Financial year-end: December
Ticker: 601111, 00753
Stock exchange: Shanghai, Hong Kong
SOURCE: COMPANY WEBSITE M AR KE TL IN E
Air China Limited is a Chinese provider of passenger airline and airline -related services, including aircraft maintenance,
ground handling services, repair and overhaul services, airport terminal services, and air catering services. The company
primarily operates in China, the British Virgin Islands, Hong Kong and Macau.
The company operates around 298 passenger flight routes, including 71 international routes, 15 regional routes and 212
domestic routes, covering 154 cities in 31 countries and regions, including 47 international cities, three regional cities
and 104 domestic cities. Air China is also a member of the Star Alliance.
The company operates through two segments: airline operations, and other operations.
The airline operations segment comprises air passenger and air cargo services. The company's other operations
segment is involved in the provision of aircraft engineering, ground services, and other airline-related services.
Through its membership of the Star Alliance, Air China's network reaches 1,328 destinations in 195 countries. The
company has partnerships with 28 airlines, and operates on 451 routes with 9,379 weekly flights. Its partners include
Tibet Airlines, Egypt Air, British Airways, Shenzhen Airlines, Cathay Pacific Airways, Japan's All Nippon Airways,
Austrian Airlines and Scandinavian Airlines.
The company's subsidiaries include China National Aviation Company Limited, AIE, Zhejiang Air Service, Shanghai Air
China Aviation Service Co., Ltd., Air China Development Corporation (Hong Kong) Limited, Golden Phoenix, Total
Transform Group Ltd., and Air China Cargo.
Key Metrics
The company recorded revenues of $15,976 million in the fiscal year ending December 2013, a decrease of 1.3%
compared to fiscal 2012. Its net income was $531 million in fiscal 2013, compared to a net income of $784 million in the
preceding year.
More recent financial information was not available for this company at the time of publication.

Table 8: Air China Limited: key financials ($)
$ million 2009 2010 2011 2012 2013

Revenues 8,362.6 13,422.3 16,013.0 16,186.0 15,975.8
Net income (loss) 781.5 2,007.3 1,285.1 783.6 531.0
Total assets 17,560.4 25,835.4 28,202.9 30,524.4 33,416.1
Total liabilities 13,662.6 19,103.6 20,148.1 22,017.9 23,987.7
Employees 23,807 24,459 24,474 59,328 64,854
SOURCE: COMPANY FILINGS M AR KE TL IN E
Table 9: Air China Limited: key financials (CNY)
CNY million 2009 2010 2011 2012 2013

Revenues 51,393.0 82,488.0 98,409.5 99,472.8 98,180.8
Net income (loss) 4,803.0 12,336.0 7,898.0 4,815.8 3,263.6
Total assets 107,919.0 158,774.0 173,324.0 187,591.0 205,361.9
Table 10: Air China Limited: key financial ratios
Ratio 2009 2010 2011 2012 2013

Profit margin 9.3% 15.0% 8.0% 4.8% 3.3%
Revenue growth (2.9%) 60.5% 19.3% 1.1% (1.3%)
Asset growth 7.5% 47.1% 9.2% 8.2% 9.5%
Liabilities growth 5.0% 39.8% 5.5% 9.3% 8.9%
Debt/asset ratio 77.8% 73.9% 71.4% 72.1% 71.8%
Return on assets 4.6% 9.3% 4.8% 2.7% 1.7%
Revenue per employee $351,265 $548,767 $654,286 $272,823 $246,335
Profit per employee $32,828 $82,068 $52,511 $13,208 $8,188

Figure 13: Air China Limited: revenues & profitability
Figure 14: Air China Limited: assets & liabilities

ANA Holdings Inc.
Table 11: ANA Holdings Inc.: key facts
Shiodome City Center, 1-5-2 Higashi Shimbashi, Minato-ku, Tokyo

Head office:
1057140, JPN
Telephone: 81 3 6735 5555
Website: www.anahd.co.jp
Financial year-end: March
Ticker: 9202, ANA
Stock exchange: Tokyo, London
AN A Holdings Inc., along with its subsidiaries, is engaged in providing passenger and cargo air transportation, travel
services and other airline related activities. The company operates through 121 subsidiaries and 40 affiliates, and has 62
consolidated subsidiaries and 18 equity-method subsidiaries. AN A primarily operates in Japan.
AN A operates through five segments: air transportation, airline -related activities, travel services, trade and retail, and
other activities.
The air transportation segment primarily provides passenger, cargo, and mail transportation services. ANA operates a
fleet of 231 aircraft on 133 routes in its domestic market of Japan, and 54 international routes. The passenger operations
of the company consist of three full-service carriers, All Nippon Airways, ANA WINGS and Air Japan as well as one low -
cost carrier, Vanilla Air.
In FY2014, the company carried 42.6 million passengers with a load factor of 62% in the domestic market. The domestic
available seat kilometers (ASK) and revenue passenger kilometers (RPK) stood at 61,046 million and 37,861 million,
respectively. During the same year, the company carried around 6.3 million passengers with a load factor of 73.9% in the
international market. Further the international ASK and RPK figures stoo d at 41,451 million and 30,613 million,
respectively.
The company provides cargo services through cargo freighters and belly space on passenger planes. It offers 10
domestic flights on six routes daily, and 162 international flights on 18 routes weekly. In FY2014, AN A carried 477,081
and 710,610 tons of cargo in the domestic and international markets respectively.
AN A offers travel services through its subsidiary ANA Sales, which is involved in airline ticketing and travel services. Its
ticketing business is targeted at both individual and corporate customers, while the travel services plans and markets
travel packages that combine air transportation services offered by AN A with lodging and other travel options.
The company's trade and retail segment is led by All Nippon Airways Trading, which is involved in aircraft parts
procurement, aircraft imports and exports, leasing and sales, planning and procurement for in -flight services and
merchandise sales, airport retail operations and other businesses related to air transportation. It also imports and sells
paper, pulp and food products, imports and exports semiconductors and electronic components, provides advertising
agency services, and operates an online shopping site and airport duty free shops in Japan.
The airline-related activities segment is involved in a range of businesses in support of air transportation services,
including airport ground services, aircraft maintenance, vehicle maintenance, cargo and logistics, in -flight catering and
call centers as well as commission work from other airlines. The company runs its airline -related segment through two
subsidiaries Overseas Courier Service and ANA Systems.
The other activities segment includes segments such as facility management, business support and other operations.

Key Metrics
The company recorded revenues of $15,125 million in the fiscal year ending March 2014, an increase of 7.9% compared
to fiscal 2013. Its net income was $178 million in fiscal 2014, compared to a net income of $408 million in the preceding
year.
Table 12: ANA Holdings Inc.: key financial s ($)
$ million 2010 2011 2012 2013 2014

Revenues 11,557.4 12,826.2 12,418.3 14,015.9 15,125.3
Net income (loss) (542.2) 220.2 266.2 407.6 178.4
Total assets 17,563.4 18,214.7 18,918.9 20,191.2 20,534.8
Employees 32,578 32,731 32,884 32,634 33,719
Table 13: ANA Holdings Inc.: key financial s (¥)
¥ million 2010 2011 2012 2013 2014

Revenues 1,223,353.0 1,357,653.0 1,314,482.0 1,483,581.0 1,601,013.0
Net income (loss) (57,387.0) 23,305.0 28,181.0 43,140.0 18,886.0
Total assets 1,859,085.0 1,928,021.0 2,002,570.0 2,137,242.0 2,173,607.0
Total liabilities 1,378,996.0 1,401,667.0 1,447,711.0 1,364,142.0 1,427,537.0
Table 14: ANA Holdings Inc.: key financial ratios
Ratio 2010 2011 2012 2013 2014

Profit margin (4.7%) 1.7% 2.1% 2.9% 1.2%
Revenue growth (12.2%) 11.0% (3.2%) 12.9% 7.9%
Asset growth 5.6% 3.7% 3.9% 6.7% 1.7%
Liabilities growth (4.2%) 1.6% 3.3% (5.8%) 4.6%
Debt/asset ratio 74.2% 72.7% 72.3% 63.8% 65.7%
Return on assets (3.2%) 1.2% 1.4% 2.1% 0.9%
Profit per employee ($16,642) $6,727 $8,096 $12,489 $5,291

Figure 15: ANA Holdings Inc.: revenue s & profitability
Figure 16: ANA Holdings Inc.: a ssets & liabilities

China Eastern Airlines Corporation Limited
Table 15: China Eastern Airlines Corporation Limited: key facts
Head office: 2550 Hongqiao Road, Shanghai 200335, CHN

Telephone: 86 21 6268 6268
Fax: 86 21 6268 6116
Website: en.ceair.com
Ticker: CEA, 600115
Stock exchange: New York, Shanghai
China Eastern Airlines Corporation Limited (CEA), a state-owned air transport company, offers domestic, regional and
international passenger airline services, primarily operating from Shanghai's Hongqiao International Airport and Pudong
International Airport. It also offers ticket handling services, airport ground services, cargo handling services, hotel
reservation, travel agency, and other related services. The company operates in China, Hong Kong, Macau and Taiwan.
CEA operates through a single segment, airline transportation operations, which comprise the provision of passenger,
cargo, mail delivery, tour operations and other extended transportation services.
In the air passenger business, CEA offers passenger services to over 200 destinations in 30 countries through a fleet of
almost 500 aircraft.
The company operates most of its flights through its three hubs located in eastern, northwestern and southwestern
China, namely Shanghai, Xi'an and Kunming respectively, with Shanghai as its main hub and Xi'an and Kunming
operating as regional hubs.
The company's cargo and mail business utilizes the same route network used by its passenger airline activities. It carries
cargo and mail on its freight aircraft as well as in available cargo space on its passenger aircraft.
CEA also provides other services which primarily include tour operations, air catering and other miscellaneous activities.
The company's subsidiaries include the following: China Eastern Airlines Jiangsu, China Cargo Airlines, Shanghai
Eastern Flight Training, Eastern Airlines Hotel, Shanghai Eastern Airlines Logistics, Shanghai Airlines Hotel Investment
Management, China United Airlines, and Shanghai Airlines International Travel Group among others.
Key Metrics
The company recorded revenues of $14,803 million in the fiscal year ending December 2013, an increase of 4.6%
preceding year.

Table 16: China Eastern Airlines Corporation Limited: key financials ($)
$ million 2009 2010 2011 2012 2013

Revenues 6,481.2 12,252.0 13,408.5 14,152.1 14,802.5
Net income (loss) 806.8 88.2 744.6 480.6 386.1
Total assets 11,718.8 16,813.2 18,670.1 20,147.5 22,791.6
Employees 45,938 57,096 59,872 65,000 68,874
Table 17: China Eastern Airlines Corporation Limited: key financials (CNY)
CNY million 2009 2010 2011 2012 2013

Revenues 39,831.0 75,296.0 82,403.0 86,972.9 90,970.4
Net income (loss) 4,958.0 542.0 4,576.0 2,953.6 2,372.6
Total assets 72,019.0 103,327.0 114,739.0 123,818.6 140,068.0
Table 18: China Eastern Airlines Corporation Limited: key financial ratios
Ratio 2009 2010 2011 2012 2013

Profit margin 12.4% 0.7% 5.6% 3.4% 2.6%
Revenue growth (3.0%) 89.0% 9.4% 5.5% 4.6%
Asset growth (1.6%) 43.5% 11.0% 7.9% 13.1%
Liabilities growth (18.7%) 27.8% 5.5% 6.8% 12.3%
Debt/asset ratio 95.7% 85.2% 81.0% 80.2% 79.6%
Return on assets 6.8% 0.6% 4.2% 2.5% 1.8%

Figure 17: China Ea stern Airline s Corporation Limited: revenues & profitability
Figure 18: China Ea stern Airline s Corporation Limited: assets & liabilities

China Southern Airlines Company Limited
Table 19: China Southern Airlines Company Limited: key facts
Head office: 278 Jichang Road, Guangzhou, Guangdong 510405, CHN

Telephone: 86 20 86124462
Fax: 86 20 86659040
Website: www.csair.com
Ticker: ZNH, 600029
Stock exchange: New York, Shanghai
China Southern Airlines Company Limited (CSAC) provides air transporta tion and related services. It has operations in
China, Hong Kong, Macau, Taiwan, and Southeast Asia and other parts of the world.
The company conducts its airline operations through subsidiaries including Xiamen Airlines, Shantou Airlines Company
Limited (Shantou Airlines), Zhuhai Airlines Company Limited (Zhuhai Airlines), Guizhou Airlines Company Limited
(Guizhou Airlines) and Chongqing Airlines Company Limited (Chongqing Airlines). Its airline operations are integrated
with its airline-related activities which include aircraft and engine maintenance, flight simulation, and air catering
operations.
CSAC's principal base of operations is located in Guangzhou. The company's operations primarily focus on the domestic
market, operating regional routes and international flights.
CSAC's domestic routes serve provinces and autonomous regions in China including Guangdong, Fujian, Hubei, Hunan,
Hainan, Guangxi, Guizhou, Henan, Heilongjiang, Jilin, Liaoning and Xinjiang, while also serving all four centrally-
administered municipalities in China, namely, Beijing, Shanghai, Tianjin, and Chongqing.
The company's regional operations include flights between destinations in China, Hong Kong, Macau and Taiwan.
CSAC's international operations include scheduled services to cities in Australia, Austria, Bangladesh, the UK, Burma,
Cambodia, Canada, Dutch, France, Georgia, Germany, India, Indonesia, Japan, Kazakhstan, Kyrgyzstan, Malaysia,
Maldives, Nepal, New Zealand, Pakistan, Philippines, Russia, Saudi Arabia, Singapore, Sou th Korea, Tajikistan,
Thailand, Turkey, Turkmenistan, the UAE, the US, and Vietnam among other destinations.
CSAC provides air cargo and mail services through Boeing 747 and Boeing 777 freighters, servicing international cargo
routes including, Shanghai to Amsterdam, Frankfurt, Vienna, Los Angeles, Chicago, Anchorage, Vancouver, Osaka and
Guangzhou to Amsterdam and Los Angeles, Chongqing to Amsterdam, and Qingdao to Los Angeles. The company
conducts its cargo business primarily through cargo hubs in Guangzh ou and Shanghai.
The company's subsidiaries include the following: Shantou Airlines Company Limited, Xiamen Airlines Company Limited,
Xiamen Airlines Company Limited, Guangzhou Nanland Air Catering Company Limited, Guangzhou Baiyun International
Logistic Company Limited, China Southern Airlines Group Air Catering Company Limited, and Nan Lung International
Freight Limited.
Key Metrics
The company recorded revenues of $16,035 million in the fiscal year ending December 2013, an increase of 1.5%
preceding year.

Table 20: China Southern Airlines Company Limited: key financials ($)
$ million 2009 2010 2011 2012 2013

Revenues 9,119.2 12,657.5 14,197.5 15,799.9 16,035.4
Net income (loss) 85.8 944.6 831.5 426.2 323.2
Total assets 15,417.5 18,099.0 21,057.7 23,179.8 26,882.2
Employees 50,412 57,096 54,326 73,668 75,154
Table 21: China Southern Airlines Company Limited: key financials (CNY)
CNY million 2009 2010 2011 2012 2013

Revenues 56,043.0 77,788.0 87,252.0 97,100.0 98,547.0
Net income (loss) 527.0 5,805.0 5,110.0 2,619.0 1,986.0
Total assets 94,750.0 111,229.0 129,412.0 142,454.0 165,207.0
Table 22: China Southern Airlines Company Limited: key financial ratios
Ratio 2009 2010 2011 2012 2013

Profit margin 0.9% 7.5% 5.9% 2.7% 2.0%
Revenue growth 1.4% 38.8% 12.2% 11.3% 1.5%
Asset growth 14.1% 17.4% 16.3% 10.1% 16.0%
Liabilities growth (2.4%) 12.8% 13.1% 12.1% 19.5%
Debt/asset ratio 75.8% 72.8% 70.8% 72.1% 74.3%
Return on assets 0.6% 5.6% 4.2% 1.9% 1.3%

Figure 19: China Southern Airlines Company Limited: revenues & profitability
Figure 20: China Southern Airlines Company Limited: assets & liabilities

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Industry associations
International Civil Aviation Organization (ICAO)
252/1 Vibhavadi-Rangsit Road, Chatuchak, Bangkok 10900, THA
Tel.: 66 2 537 8189
Fax: 66 2 537 8199
www.icao.int
International Air Transport Association (IATA)
800 Place Victoria, PO Bo x 113, Montreal, H4Z 1M1, Quebec, CAN
Tel.: 1 514 874 0202
Fax: 1 514 874 9632
www.iata.org
Related MarketLine research

Industry Profile
Global Airlines
Airlines in Europe
Airlines in North America
Airlines in South America
Airlines in the Middle East

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MarketLine Industry Profile

Reference Code: 0200-0756

Publication Date: May 2015

Asia-Pacific - Airlines 0200 - 0756 - 2014

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 1

Market value forecast

Market volume forecast

Asia-Pacific - Airlines 0200 - 0756 - 2014

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 2

Market value ..................................................................................................................................................................................2

Market value forecast...................................................................................................................................................................2

Market volume forecast ...............................................................................................................................................................2

Geography segmentation ............................................................................................................................................................2

Market ri valry .................................................................................................................................................................................2

Market Overview ...............................................................................................................................................................................7

Market analysis .............................................................................................................................................................................7

Market value ..................................................................................................................................................................................9

Market Segmentation .....................................................................................................................................................................11

Geography segmentation ..........................................................................................................................................................12

Market Outlook ................................................................................................................................................................................13

Market value forecast.................................................................................................................................................................13

Market volume forecast .............................................................................................................................................................14

Five Forces Analysis ......................................................................................................................................................................15

Supplier power ............................................................................................................................................................................18

New entrants ...............................................................................................................................................................................20

Asia-Pacific - Airlines 0200 - 0756 - 2014

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 3

China Eastern Airlines Corporation Limited ...........................................................................................................................32

China Southern Airlines Company Limited.............................................................................................................................35

Related MarketLine research....................................................................................................................................................39

Asia-Pacific - Airlines 0200 - 0756 - 2014

© MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED Page | 4

Table 2: Asia–Pacific airlines industry volume: million passengers, 2010–14 ......................................................................10

Table 4: Asia–Pacific airlines industry geography segmentation: $ million, 2014 ................................................................12

Table 5: Asia-Pacific airlines industry value forecast: $ million, 2014–19 .............................................................................13

Table 7: Air China Limited: key facts ...........................................................................................................................................26

Table 8: Air China Limited: key financials ($) .............................................................................................................................27

Table 9: Air China Limited: key financials (CNY).......................................................................................................................27

Table 10: Air China Limited: key financial ratios ........................................................................................................................27

Table 11: ANA Holdings Inc.: key facts .......................................................................................................................................29

Table 12: ANA Holdings Inc.: key financials ($).........................................................................................................................30

Table 13: ANA Holdings Inc.: key financials (¥).........................................................................................................................30

Table 14: ANA Holdings Inc.: key financial ratios ......................................................................................................................30

Asia-Pacific - Airlines 0200 - 0756 - 2014

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Figure 2: Asia–Pacific airlines industry volume: million passengers, 2010–14.....................................................................10

Figure 3: Asia–Pacific airlines industry category segmentation: % share, by volume, 2014..............................................11

Figure 5: Asia-Pacific airlines industry value forecast: $ million, 2014–19............................................................................13

Figure 7: Forces driving competition in the airlines industry in Asia-Pacific, 2014...............................................................15

Figure 13: Air China Limited: revenues & profitability ...............................................................................................................28

Figure 14: Air China Limited: assets & liabilities ........................................................................................................................28

Figure 15: ANA Holdings Inc.: revenues & profitability .............................................................................................................31

Figure 16: ANA Holdings Inc.: assets & liabilities ......................................................................................................................31

Asia-Pacific - Airlines 0200 - 0756 - 2014

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South America comprises Argentina, Brazil, Chile, Colombia, and Venezuela.

Scandinavia comprises Denmark, Finland, Norway, and Sweden.

Asia-Pacific - Airlines 0200 - 0756 - 2014