China United Airlines to become low-cost carrier

China United Airlines (CUA), a subsidiary of China Eastern Airlines, announced on July 2 that it will officially transform itself into a low-cost carrier, reports the Chinese-language Beijing News.

CUA will become the fourth low-cost carrier to spring up in China as well as the first state-owned operator. It will also be the first with its base in Beijing.

After the transformation, CUA will be at least 20% cheaper than other airlines flying the same routes and maintain a difference of between 20%-40%, said airline president Zhang Lanhai. The firm will work on a direct ticket purchase platform common to low cost carriers, and will consider charging for meals, select seating, and luggage check-in so as to lower costs.

Low cost carriers provide cheaper tickets through downsizing function costs. Darren Hulst, director of product forecasting for Boeing Commercial Airplanes, said that the scale of low cost carriers in Asia has grown six-fold in the past decade and will continue to grow another 10% over the next two decades. The global market share of Chinese low-cost carriers is only 8%, indicating a huge space to develop. Chinese low-cost carriers will develop fast and be aggressive competitors in the global future market, he said.

Spring Airlines, China West Air, and 9 Air have all lowered their costs and the prices of tickets through raising seat numbers and occupancy rates, adding flight hours and charging for meals. With UCA joining the market of low cost carriers, Huabei (north), Huadong (east), Huanan (south), and the west areas have their own locally based low-cost carriers.

With China Express Airlines, Chengdu Airlines and Beijing Capital Airlines expressing interest in the transformation, major airlines such as Air China and China Southern Airlines are also considering transforming their subsidiary airlines. It is expected that low-cost carriers will soon become the mainstream.

Source: Want China Times 

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