• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
China Eastern Airlines - Alliance Analysis
 

China Eastern Airlines - Alliance Analysis

on

  • 2,444 views

Short presentation concerning China Eastern Airlines and the various advantages of it joining Oneworld Airline Alliance

Short presentation concerning China Eastern Airlines and the various advantages of it joining Oneworld Airline Alliance

Statistics

Views

Total Views
2,444
Views on SlideShare
2,436
Embed Views
8

Actions

Likes
1
Downloads
0
Comments
2

1 Embed 8

http://www.slideshare.net 8

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel

12 of 2 previous next

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
  • could I get a ppt file?
    Are you sure you want to
    Your message goes here
    Processing…
  • Looks like MU is to now join SkyTeam!
    I made this presentation a few weeks before the announcement. I'm not entirely sure how China Southern and China Eastern will work in an alliance together but it will be interesting to see how strong SkyTeam becomes in China in the next few years.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    China Eastern Airlines - Alliance Analysis China Eastern Airlines - Alliance Analysis Presentation Transcript

    • CA3007 Strategic Management in the Aviation Industry
    • CA3007 Strategic Management in the Aviation Industry – Adam Marriott 06008442 Overview of China Eastern (MU) Overview of Oneworld (OW) Advantages MU offers OW Advantages OW offers MU Why not Star or SkyTeam Alliance? How this will effect the market Hurdles to overcome for Alliance membership Conclusion To summarise I will be reviewing the advantages on the basis of current and future markets to both MU and Oneworld of membership and a brief overview of specific niches filled and the effect upon the global Aviation outlook.
    • CA3007 Strategic Management in the Aviation Industry – Adam Marriott 06008442
      • One of the three largest airlines in China by fleet size and the primary air carrier serving Shanghai – Chinese/Global Hub, 2010 Shanghai World Expo, Financial centre
      • Co-operation with American Airlines (Oneworld), Air France (SkyTeam), British Airways (Oneworld), Qantas (Oneworld) and Cathay Pacific (Oneworld) offering over 300 destinations (flychinaeastern.com)
      • Not an alliance member however, keen interest to join into SkyTeam or Oneworld. Announcement to be made in April .(chinaeconomicreview.com)
      • Recent merger with Shanghai Airlines (Star Alliance Member) with it becoming a MU subsidiary allowing for a boost in traffic and cost-saves
      • (chinaeconomicreview.com)
      • Both China Southern (SkyTeam) and Air China (Star) are part of major alliances giving China Eastern a distinct disadvantage
      • Chairman Liu Shaoyong – ex China Southern CEO, moved China Southern into SkyTeam Alliance.(skyteam.com 2007) However, MU is far better positioned to move into Oneworld to fill the Chinese gap in the Alliance and reduce overlapping.
    • CA3007 Strategic Management in the Aviation Industry – Adam Marriott 06008442 France Paris - Paris-Charles de Gaulle Airport Germany Frankfurt - Frankfurt Airport Russia Moscow - Sheremetyevo International Airport United Kingdom London - London Heathrow Airport Canada Vancouver - Vancouver International Airport United States Los Angeles - Los Angeles International Airport New York City - John F. Kennedy International Airport
      • Bangladesh
        • Dhaka - Shahjalal International Airport
      • India
        • Delhi - Indira Gandhi International Airport
        • Kolkata- Netaji Subhash Chandra Bose International Airport
      • Nepal
        • Kathmandu - Tribhuvan International Airport
      • UAE
      • Dubai - Dubai International Airport
      Vital direct destinations to Shanghai Hub *including code-share Wide coverage in South-east Asia including Japan, Korea, amongst others
    • Shanghai
    • CA3007 Strategic Management in the Aviation Industry – Adam Marriott 06008442 Oneworld covers the following destinations with the following 11 members A distinct gap remains for Mainland China
    • CA3007 Strategic Management in the Aviation Industry – Adam Marriott 06008442
      • “ The reason for airlines banding together is to share an otherwise wasted market which is still regulated by bilateral government negotiations” (Abeyrantne, Pg 3, 2001) China Eastern bypasses the bilateral agreements put in place by CAAC for example frequency restrictions between US-China for foreign carriers:
      • “ (h) Effective March 25, 2010 : an additional 21 weekly frequencies
      • (f) Effective March 25, 2011 : an additional 14 weekly frequencies
      • (g) Effective March 25, 2012 : an additional 14 weekly frequencies”(state.gov)
      • “ The underlying philosophy of the airline alliances ... Is not so much an emphasis on more effective use of resources ... But rather an overall reliance on the strategy of location”(Abeyrantne Pg4 2001)
      • Shanghai Airlines is part of Star Alliance providing key Shanghai capacity for MU. If MU are to join Oneworld, Shanghai Airlines will be forced to leave Star and also join Oneworld as a affiliate member. Damaging the power of Star and boosting Oneworld’s China presence further.
      Combined frequency 55.2% Combined Capacity 53.9% Source: OAG Max Online for w/c 30 March 2009 SkyTeam Star
    • Currently no New York service to any mainland China destinations within Oneworld. A major opportunity for China Eastern.. Co-operation already in place for LAX – PVG with American Airlines, a greater co-operation and shared resources through Oneworld The most popular route within China, Beijing-Shanghai and many similar domestic pairings would offer Oneworld to become as competitive as other Alliances with Chinese carriers
    • CA3007 Strategic Management in the Aviation Industry – Adam Marriott 06008442
      • Sharing assets such as sales offices, maintenance and operational facilities, bringing cost reductions
      • Groupings form tight economic relationships
      • Alignment of policies and procedures, to work together to develop solutions that can be applied throughout the industry and to share best practice.
      • OW can offer an added layer of protection against China Southern and Air China by giving a credited reliable route network that can be utilised compared to being apart from an alliance
      • The benefits for passengers include possible lower prices, shorter travel times, faster mileage rewards, Increased brand awareness, and extended, optimised networks through code sharing agreements
      • Access to a much larger passenger base and extensive code shares that enables MU to gain publicity through the OW member websites e.g. Booking a flight from Seattle to Shanghai can be booked through one Airline opposed to having to book two separate flights if a connection is needed.
    •  
    • CA3007 Strategic Management in the Aviation Industry – Adam Marriott 06008442 China Eastern would not fill the niche in Star or SkyTeam due to both alliances containing major Chinese Airlines. Star – Air China, SkyTeam – China Southern. A result of severe overlapping on routes would occur.
      • Star
      • Air china already catering for the alliance within China domestically giving MU no opportunity to offer a niche in the Alliance.
      • Shanghai Airlines part of Star giving a slight incentive to MU to gain membership but has no role in the choosing of Alliance Membership
      • SkyTeam
      • China Southern a rival in the Chinese domestic market, would not compliment MU routes
      • Anti-trust regulator CAAC may prevent MU joining due to over dominance with China Southern domestically
      • MU Chairman ex China Southern CEO, moved China Southern into SkyTeam – may be inclined to do the same for MU
    • CA3007 Strategic Management in the Aviation Industry – Adam Marriott 06008442
      • Give more power to OW over Star and SkyTeam allowing for a considerable gap to finally be filled in OW’s route network
      • Allow MU to gain a boost in through passengers using Chinese Airports and regain the disadvantage of not being in a strong alliance that China Southern and Air China has held over MU for so long
      • A fairer, more competitive Asian market for passengers and MU alike. Allowing for an increase in choice
      • MU brand image boost, more attractive frequent flyer programme for business/first class, and ease of use for passengers travelling to China.
      • A sustainable boost to the growth needs of China with added security to help MU weather the global recession.
    • flightglobal.com
    • CA3007 Strategic Management in the Aviation Industry – Adam Marriott 06008442
      • CAAC approval, The CAAC imposes regulations on domestic and international routes, air fares, jet fuel prices, aircraft maintenance, and air traffic control, among others . While these regulations are necessary to ensure safety in the industry, they also limit the flexibility of MU to respond to competition, lower expenses, and adapt to market conditions. An Alliance membership would require a closer international co-operation that would almost bypass CAAC needs.
      • Restructuring of management and service is needed to enter OW, a higher quality is expected with integration of frequent flyer programmes
      • Sponsorship from an existing member is needed to be accepted into an Alliance “American Airlines parent AMR Corp is in advanced talks with China Eastern Airlines to bring it into the Oneworld alliance”(reuters.com)
      • Antitrust is not a major issue for OW membership as MU would not be teaming with one of the big 3 Chinese Airlines
    • CA3007 Strategic Management in the Aviation Industry – Adam Marriott 06008442
      • There are distinct advantages with gaining membership in OW for MU with costs and route development being the primary incentive for MU. For OW the incentive is slightly different, it is merely filling the gaps of an already near complete global network. The importance of China globally as a economic power justifies that filling this gap is an imperative and necessary for OW to remain competitive against Star and SkyTeam.
      • The frequent flyer programme will see the real benefit from membership with 1.3billion citizens (just short of doubling Europe's Population) the potential for business is truly immense. At the present rate, growth of increasing middle-classes are fuelling the propensity to travel within China and Internationally.
      • MU are sure to make an announcement within April 2010 on which Alliance they will eventually join and will eventually team resources with alliance members to make full membership a reality. With the Shanghai World Expo to be a major boost for travel to China the need to strike for OW is very near, it would be seen as a missed opportunity for OW with no China Airline of their own. To miss on this major event and the inevitable Aviation power-region that China has become and will continue to grow into would be a terrible move for all Oneworld Alliance members.
    • CA3007 Strategic Management in the Aviation Industry – Adam Marriott 06008442