China Southern looks to further its international ambitions with the Superjumbo

TOULOUSE, France - China Southern Airlines Co Ltd became the first Chinese operator of the Airbus A380 Superjumbo on Friday.

The Guangzhou-based airline, the country's largest by fleet number, will start flying the double-decker aircraft on commercial routes on Oct 17. It will begin flights from Beijing to Guangzhou and Shanghai between Oct 17 and 29.

The aircraft will begin operating on international routes within the year, when the airline's second A380 is delivered in December, said Si Xianmin, chairman of China Southern.

The carrier ordered five A380s in 2005 and they will all be delivered before the end of 2013, according to the airline.

The ticket price will be the same as other aircraft flying on routes. The price of an economy class seat between Beijing and Guangzhou is 1,700 yuan ($266).

China Southern unveiled its A380 cabin featuring 506 seats - 428 in economy class, 70 business class seats and eight first class - at the delivery ceremony.

"The economics offered by the A380 will undoubtedly improve our competitiveness on international routes and it is the perfect asset to help China Southern Airlines achieve its goal of becoming a leading global carrier," Si said.

China Southern said in September that it will launch three new international routes this year, signaling its global ambitions.

Tom Enders, president and CEO of Airbus SAS, said China Southern, which currently operates almost 200 Airbus aircraft, is his company's biggest customer in Asia.

"With the A380, China Southern will surely play a key role in the top league of the world's leading airlines," said Enders.

He said the operation of A380s during the past four years has proved that the aircraft can help carriers gain more market share and maintain an advantage among stiff competition.

Singapore Airlines Ltd, the launch customer of the A380, said earlier that the number of passengers on its Singapore to Tokyo flight has increased by 7 percent since it started to use the aircraft on the route in May 2008. The airline started flying the A380 to Los Angeles in July

By September, Airbus had received 238 orders for A380s from 18 carriers and 57 of the aircraft fly 41 routes between 25 destinations worldwide. The plane has already carried more than 15 million passengers.

The list price of the A380 jumped to $375.3 million in January from the previous figure of $295 million.

An A380 can generate a profit as long as approximately 65 percent of its seats are occupied, which is lower than the industry's average load factor, said Richard Carcaillet, director of product marketing for the A380.

Statistics from the International Air Transport Association show that the average load factor across the industry was 78.4 percent in 2010.

However, analysts said it is unlikely that China Southern will generate a profit from the aircraft over the short term.

It is more difficult for A380 to make a profit, because the load factor is too high, said Li Lei, an aviation analyst with CITICS China Securities.

"It will be decided by which route the A380 is used on," said Li.

Although the breakeven point is 65 percent, China Southern still needs about 300 passengers to fill its new aircraft on each flight, he said. Only a few domestic destinations can satisfy that requirement.

"For China Southern, it is something of a gamble to purchase the A380," said Li.

China Daily

(China Daily 10/15/2011 page9)