On July 14, Juneyao announced a plan to raise 2.7 billion yuan (US$435 million) through private placement for the purchase of four Airbus A320 jets, three spare engines and to engage in a joint venture with travel site 117go.
A week later, budget carrier Spring revealed a private placement plan to raise 4.5 billion yuan (US$725 million) for 21 A320 jets and information system and e-commerce projects, the paper said.
The decision by the two carriers, both of which went public this year, shows how airlines are trying to build new revenue sources by expanding into the O2O business, the report said.
Spring said it plans to spend 800 million yuan (US$129 million) to upgrade its information system, outfit its aircraft with Wi-Fi equipment and build an e-commerce platform. The company is hoping to complete the Wi-Fi installation across its fleet by 2018. The company said its cargo services, network and logistics operations will give its passengers access to cross-border e-commerce, while its in-flight Wi-Fi service will become a portal for such commerce.
Juneyao, a full-service carrier that caters mainly to business and leisure travelers, attracted attention with its plan to set up an e-commerce platform in collaboration with 117go. "117go has a wide range of travel products and a massive user base. It covers several popular domestic and overseas destinations and has a professional online product development team," said Xu Junmin, secretary of Juneyao's board of directors.
Juneyao said it plans to create an online travel service that will offer tours and transportation, accommodation, visa application and airport pickup services.
China's three state-owned carriers — Air China, China Eastern Airlines and China Southern Airlines — as well as Hainan Airlines are all establishing their position in e-commerce, the paper said. Wi-Fi service is seen as a key aspect of the airlines' plan to expand into e-commerce or O2O businesses but the carriers are divided on whether to charge passengers for in-flight Wi-Fi services, the paper added.
Analyst Liang Zhi said airlines currently either charge passengers for a prepaid data plan or for the actual amount of data used and have introduced ads as a way to increase revenue. Liang said charging for data used is more likely to be accepted by passengers and the carriers can generate additional income by selling ad space or through e-commerce operations.
The three state-owned carriers are currently offering free Wi-Fi on a trial basis, while Spring and Juneyao have not yet decided on a policy, Time Weekly said.
Source: Want China Times
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