Shanghai-based Spring Airlines, China's first and only low-cost carrier which became the country's fifth listed airline with a Shanghai exchange debut on Jan. 21, has undercut its rivals through cost-cutting and innovation, according to an analysis from the Changjiang Times.
The airline had a potentially dangerous but innovative idea when it offered cheap fares for passengers willing to stand throughout the flight and is set to lobby industry regulators for permission to install standing-only cabins on its planes to cram more people on board. Spring Airlines chairman Wang Zhenghu confirmed the news, saying that he began exploring the idea of a standing flight in 2008 after a chaotic Chinese New Year travel rush.
The airline has meanwhile sought to reduce the costs of taking off and landing by choosing smaller airports, according to the 70-year-old billionaire.
To save money, it shifted flights from Beijing's main airport to Shijiazhuang, a small airport about 300 km away, and gave passengers free high-speed rail tickets to get them into the capital within an hour, Wang added.
To save fuel costs, the company's pilots are asked to fly airplanes higher on the condition that it does not affect flight safety, which Wang estimated saves the company at least 30 million yuan (US$4.8 million) per year.
Cost cutting on business trips has also helped. All employees, including the chairman, must buy heavily discounted tickets or else they have to take trains and stay at budget hotels for business trips–and no one leaves the office without turning off the lights. Wang's frugal management style makes him confident he will be able to use all the 1.8 billion yuan (US$288 million) Spring Airlines raised in an initial public offering on the Shanghai Stock Exchange last month to buy up to nine Airbus A320 jets and three A320 flight simulators.
The airline currently has 48 A320 jets that travel on 73 air routes linking 88 domestic and foreign destinations. Its fleet is expected to expand to 60 planes this year and 100 in 2018, according to Wang.
In 2013, Spring Air reported a 17% rise in net profit to 732.2 million yuan (US$117 million), according to its prospectus. For the same year, net income of its larger rival China Eastern was down 25% to 2.4 billion yuan (US$385 million).
Spring Air's revenue rose to 6.56 billion yuan (US$1.05 billion) in 2013, from about 50 million yuan (US$8 million) in 2006, its first full year of operations.
Source: Want China Times
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