Ah China Southern. The airline has announced that its adding focus to its corporate business sector, which has already grown 27% year over year since 2015.
At the moment CZ has about an estimated $1 billion in corporate sales through roughly 40 contracts the airline currently has in place. That said, despite the seemingly large contracts that the airline has agreed to, it only makes up about 2% of the overall revenues for the company. Li Dongliang, senior vice president of the airline, says that the goal of the airline is to raise corporate revenue to 3% for the fiscal year 2016 – a humble target but one that is an important step to take if CZ is to be taken seriously as a viable business carrier option in the corporate world.
That said the airline has also said it aims to raise its corporate portfolio from the current 40 up to 100 in the next 5 years, corporate sales manager Siyang Wang has indicated. China Southern looks to airlines such as fellow SkyTeam members such as Delta an KLM as models for the corporate business models, both of whom boast 30-40% revenue share from these contracts. Given the home market of China Southern, this does seem like an attainable goal for the airline. Indeed China has surpassed the United Sates as the largest business travel spender in the just past 2015 fiscal year.
Li indicates that one of the airlines’ assets is its fleet and network size – it operates a staggering 670 aircraft (5th largest in the world) and transports the most passengers amongst all airlines in Asia. They will seek to utilize their scale and reachability to attract new contracts – they will also leverage their SkyTeam and international connections to sign new codeshare agreements with partners such as Delta an Virgin America in the United States and KLM, Aeroflot, CSA Czech Airlines and Air France in Europe.
Another selling point for the airline to corporate clients is the airline’s safety record. Li has mentioned that since 2012 no ‘significant’ incident has taken place on the carrier, earning the airline the Civil Aviation Administration of China’s Blue Sky Diamond Flight Safety Award as the airline has logged more than 10 million hours of safe flight operations.
While China Southern has a long way to go to become competitive in the service oriented market against the likes of the Japanese, South Korean, Thai and Singaporean carriers, they do present a seemingly safe and reliable option to China and beyond. Their membership in SkyTeam and increasingly close ties to Delta will only serve to help them secure more corporate revenue in the near future.
As they increase their presence in the North American market through their own service and through codeshare and interline agreements, look for CZ to seize more of the corporate market share. Hey you, yes you at Chase Bank of America Wells Fargo International Limited – welcome to your first China Southern flight on your next trip to Asia!