The Same Sky Different Performance Of China Eastern Self Rescue

On the last day of August, the medium-term financial reports of the four major domestic airlines came late. As expected, no matter Air China, China Southern Airlines, China Eastern Airlines and Hainan Airlines, each airline company suffered a huge loss. The revenue was cut by half year-on-year, and the total profit loss was 36.5 billion yuan. In only half a year, the loss was twice as much as that in 2008, the worst year.

In fact, the loss of Air China is more than $14.8 billion. According to the estimation of IATA, global airlines will lose 84.3 billion US dollars in 2020, and their net profit margin will decrease by 20.1%. Revenue is expected to be only $419 billion, down 50% from 2019. It's also the worst year in decades.

In the face of such severe financial performance, how should Airlines help themselves? In the dilemma, China's airlines show strong resilience and innovation, especially China Eastern Airlines. From "heart to heart" to "air rail combined transport", a state-owned aviation giant has been able to lead the industry innovation trend frequently.

What is the secret behind the elephant's turn?

The same sky is different

On September 3, IATA disclosed that global air passenger demand continued to decline in July this year, with a year-on-year decrease of 79.8%. Alexander de junyak, President and chief executive officer of IATA, lamented that the demand crisis continued in July and had hardly been alleviated. "With four fifths of air passengers at home, the industry remains largely paralyzed." He pointed out that many airlines could not re open their flights because of the lack of confidence of the government after the closure of the border.

In contrast, the performance of China's aviation market in recent two months can be regarded as "special". While domestic passenger traffic fell by 57.5% year-on-year in July, China only fell by 28.4% and its passenger carrying rate rose to 74.4%. Domestic market performance is second only to Russia.

China's data for August and September are likely to be better.

On September 3, Zhou Yun was going on a business trip on a flight from Shanghai to Beijing. She found that, in addition to the fact that the flight occupancy rate was not as full as before (about 70% by visual inspection), the crowd at Hongqiao Airport was no different from that before the epidemic, and the airline VIP room was even more overcrowded.

On the same day, just as the State Council announced the holiday arrangements for the National Day golden week, Xin Ling, who lives in Guangzhou, immediately made a reservation for her family's "11-year-old" trip to Tibet. Previously, she had bought two sets of "xinxinfei" of China Eastern Airlines, which happened to be exchanged for the corresponding flights. However, when she made a reservation for an adult's ticket and a telephone reservation for her 6-year-old daughter's ticket, she was saddened to find that the economy class seat on the same flight was already available In a short period of time, all communications were robbed, leaving only business class.

The reporter learned from institutions such as Ctrip that this year's National Day Mid Autumn Festival has been closed for eight days, which has suppressed the travel demand for nine months. It is likely that there will be a concentrated outbreak, and the National Day is expected to usher in the first tourism peak and consumption golden week this year. "It's been a long time since I've been shopping crazily for two days." A Ctrip store owner said that the golden week bonus has already appeared. In addition, according to Ctrip data, in Hainan, Sichuan, Yunnan and other popular destinations, the national day free travel product booking increased by more than 100% month on month compared with the same period in September.

Compared with February and March, the prosperity at this time is a big difference.

"At that time, there were very few people in the airport and it was empty." Zhou Yun remembers that when she was on a business trip at the end of March, worried about the epidemic situation, she took a plane wearing two masks. Su Ming, who works at Hongqiao Airport, clearly remembers the first flight to Shanghai after the lifting of the ban in Wuhan on April 8. Many passengers wearing raincoats or protective clothing and disposable gloves came out of the plane.

From March to may, although the epidemic situation in China has been controlled and various places have begun to return to work and production, due to a number of policy restrictions, people's travel willingness is still low, and cross provincial travel is still relatively small. Even if airlines gradually restore capacity, it is difficult to improve the occupancy rate.

Wu Shijie, deputy director of the Aviation Safety Office of the Civil Aviation Administration of China, said that from January to June this year, China's civil aviation industry completed a total transportation turnover of 31.91 billion ton kilometers, 50.8% of the same period last year. Among them, domestic and international routes completed 20.74 billion and 11.17 billion ton kilometers, respectively, 51.4% and 49.8% of the same period last year. The total passenger traffic volume of the whole industry was 150 million, 45.8% of the same period last year. Among them, 140 million and 8.519 million domestic and international routes were completed, respectively, 48.6% and 23.5% of the same period last year.

With more than half of the number of passengers reduced, the cost of airplanes, airports, and personnel is still there. The huge gap between exports and entrances immediately makes the medium-term financial reports of airlines record astonishing losses.

According to the financial reports of the four major airlines, the operating revenue of HNA holdings in the first half of the year was 11.711 billion yuan, down 66.57% year-on-year. After deducting the non net loss of 9.724 billion yuan, the year-on-year decrease was 17105%. Air China's operating revenue in the first half of the year was 29.646 billion yuan, down 54.61% year on year. After deducting the non net loss of 9.597 billion yuan, the year-on-year decrease was 417.20%. In the first half of the year, China Eastern's revenue was 25.129 billion yuan, down 52.7% year on year. After deducting the non net loss of 8.787 billion yuan, the year-on-year decrease was 662.55%. China Southern's revenue in the first half of the year was 38.964 billion yuan, down 46.58% year on year. After deducting the non net loss of 8.418 billion yuan, the year-on-year decrease was 687.03%.

In other words, the four major airlines lost 36.5 billion yuan in half a year, equivalent to 200 million yuan a day. I'm afraid the end of waiting for death is bankruptcy. After witnessing the bankruptcy and liquidation of more than 20 foreign airlines in a few months, the domestic airlines, especially China Eastern Airlines, began to take active actions.

We should focus on the change of production factors June 30, China Eastern Airlines internal resumption of the first half of the business situation, China Eastern group leader said.

Heart to heart effect

Looking at the semiannual reports of the four major airlines, the 21st century economic report reporter found that the management of China Eastern Airlines spent a lot of space in discussing and analyzing the business situation of the first half of the year on how to accurately implement policies and stabilize the operation, including the continuous development of innovative product marketing.

According to the financial report of China Eastern Airlines, the company has taken the lead in launching "customized charter flights" in the whole industry, serving the cross regional return of enterprises returning to work, and more than 80% of domestic flights in some regions are recovered. Continuously optimize revenue management and launch intelligent freight rate control system. We have actively expanded auxiliary products, launched more than one seat and other products, increased the range of prepaid luggage sales routes, and made efforts to improve the revenue of auxiliary business. The new member system of "Oriental wanlihang" was launched, and the "China Eastern Airlines wallet" with "points + cash" payment was launched to enrich the use scenarios of member points The most important thing in the series is to ignite the heart.

"When the occupancy rate is the worst, the good routes are about 50% - 60%, and the poor routes are only 20% and 30%." Shangguan Xuemin, deputy general manager of China Eastern Airlines Customer Committee, recalled that in May, the group management held a meeting to discuss whether it could stimulate the consumption psychology of the masses rather than let the transport capacity fly. "Even if we can't make money here, we can lose less and let other industries live."

With the strong support of the senior management, the customer Committee, the Department of Shangguan Xuemin, immediately started to calculate the revenue of several routes in the past three years at different times, and analyzed which period of time tickets were taken out to make profits for promotion, and finally selected the products of xinxinfei on weekends. "Flights on weekends are the worst." Shangguan Xuemin admitted that China Eastern Airlines urgently needs to improve the attendance rate of the weekend period, so the internal consensus agreed to use the weekend time to test the water first.

On June 18, China Eastern Airlines officially launched the weekend "xinfeifei" products. At the end of this year, consumers can redeem the economy class of China Eastern Airlines for any week before the end of this year.

China Eastern Airlines did not expect that once the product was launched, it would cause strong repercussions among the consumer groups. For a time, the purchase entrance of China Eastern Airlines app was jammed and shut down. Even on the idle fish of second-hand goods website, many scalpers began to increase prices and resell "xinxinfei", which can be seen from the booming demand.

After China Eastern Airlines explored its way, other airlines quickly followed suit. Up to now, 15 domestic airlines, including China Southern Airlines, Hainan Airlines and Sichuan Airlines, have released a wide range of freewheeling products. Some of them are limited to weekend time, some are limited to morning and evening flights, some are serving a certain regional market, some are experience of upgrade and VIP lounge, and some are tax-free Shopping marketing, eight immortals across the sea each out of their own tricks.

In addition to airlines, various OTA platforms have also joined in the market competition of "xinxinfei". The "66 yuan fly nationwide" package of Feizhu, the "weekly long holiday" jointly launched by Ctrip, qunar.com, Aokai airlines, Qingdao airlines and Ruili airlines, and the "let me fly" package launched by the same route. The launch of each package has triggered a rush purchase in the market. Under multiple effects, China's old people People's travel consumption enthusiasm has finally ignited.

Soon, there were significant changes in July and August. Taking Hongqiao Airport as an example, from March to June this year, the domestic outbound passenger volume of Hongqiao Airport was 468000, 629000, 986000 and 1151000 respectively, and the domestic inbound passenger volume was 558000, 671000, 1062000 and 119100 respectively. However, from July to August, the domestic outbound passenger volume quickly rose to 1537000 and 1593000, and the domestic inbound passenger volume increased to 1537000 and 1593000 respectively The number of passengers also reached 1.592 million and 1.697 million. Among them, the increase of passenger volume in July was the most obvious, and the important reason should be the stimulation effect of all kinds of fly by heart.

Wu Shijie said that in July, civil aviation transportation production continued to show a rising trend, with a total transportation turnover of 6.88 billion tons / km, a year-on-year decrease of 39.3%, and a decrease of 3.4 percentage points compared with that of the previous month; and 39.1 million passenger trips were completed, with a year-on-year decrease of 34.1% and a decrease of 8.3% compared with the previous month.

The latest "civil aviation operation report of August 2020" released by Feiyou technology also shows that, driven by the summer transport, the number of flights carried out by mainland China routes in August continued to maintain a stable trend, which has been nearly the same as that of the same period last year, and the average seat rate in August was about 72.74%. China's mainland airports took off and landed more than 28000 sorties a day in August, up 12% from July. The single day maximum in August is close to the average daily take-off and landing level in 2018. The number of departing flights of six ten million level airports in August showed a positive growth compared with the same period last year. Sanya airport had the best recovery, with the flight volume of 112% in August last year. In addition, 34 10 million level mainland airports returned in August to more than 80% of the same period last year.

The "heart to heart" package offered by airlines and OTA not only accelerates the recovery of the aviation market, but also stimulates Hotel, catering, car rental, tourism and other related consumption, and drives the recovery of relevant industrial chain.

Yu zhanfu, the global partner of Roland Berger, thinks that the greater significance of the airlines' flying at will lies in that instead of waiting, the airlines start to ask the way, actively detect and judge, and abandon the passive to choose the initiative. "This is a more significant change of the airlines in the" post epidemic "era."

As a taster, China Eastern Airlines has also reaped obvious market returns. According to the data obtained by the 21st century economic report from Feiyou technology, the number of flights of China Eastern Airlines in June was 39712, and the passenger occupancy rate reached 68.5%. However, in July and August, not only did the number of Flights soar to 50295 and 57610, but also increased to 74.1% and 75.0%.

Xinxinfei's successful water test has boosted the power of China Eastern Airlines' innovation. Insiders of China Eastern Airlines disclosed to reporters that on June 30, China Eastern Airlines Group said at the internal mid-term performance meeting that it should deeply tap the aviation market demand, deeply study the non-contact economy and value-added services, innovate the passenger transport product system, subtract from the conventional service items, add on the new value-added service, and launch it More popular and popular ticket products and service products will be developed, such as ticket pre-sale products such as "free flight on weekends" will continue to ignite the market heat and activate dormant demand.

Therefore, after xinxinfei on the weekend, China Eastern Airlines has successively launched products such as "xinxinfei in the morning and evening" and "unlimited flying in the western regions". Shangguan Xuemin said that the combination mode of xinxinxinfei also includes regional markets and prime time, which will be launched according to market conditions.

Air rail combined transport breaks down

On the aspect of "follow China Airlines", if it can lead to far-reaching innovation in the industry, it is only possible for China Eastern to follow the innovation of the industry.

On August 25, Tanabata, China Eastern Airlines and China Railway Group suddenly announced that China Eastern Airlines app and railway 12306app fully realized the system docking, and the "air rail intermodal" product was officially launched. Through the app of either party, passengers can purchase the combined tickets of China Eastern Airlines, Shanghai Airlines and high-speed rail trains in one-stop mode.

In terms of coverage area, the first phase of "air rail intermodal transport" takes Shanghai Hongqiao International Airport and railway Hongqiao Station as the core hub, and opens the two-way transportation from most cities in Jiangsu, Zhejiang and Anhui to the domestic navigable cities of China Eastern Airlines through Shanghai; in the future, the intermodal transit cities will gradually expand to Beijing, Guangzhou, Shenzhen, Chengdu, Nanjing, Hangzhou, Wuhan, Xi'an, etc Point City.

Different from the previous way that passengers need to book tickets and train tickets at the air and railway ticket purchase ports, after the launch of the "air rail combined transport" product, passengers can choose their own flights to freely combine with high-speed rail according to their wishes, so as to easily complete all the booking process on app.

This is not only the first time that China's high-speed rail and civil aviation enterprises have realized the interconnection of their own flight information, but also the first time for China's civil aviation enterprises to realize the interconnection of their own data.

Therefore, Yu zhanfu believes that the formal and in-depth connection between China Eastern Airlines and the ticketing system of China Railway Group is the most significant breakthrough and milestone step in the air rail intermodal transport which has been promoted in various forms in recent years.

The 21st century economic report learned from the sources close to 12306 that in the past few years, many airlines, including Air China, China Southern Airlines and China Eastern Airlines, have communicated with the State Railway Group in the hope of achieving "air rail intermodal transport" cooperation. Even OTAs such as Ctrip have also gone to secret business, and everyone hopes to connect with 12306 system. However, 12306 itself has a huge amount of data and trading volume, and the system has a heavy task, so it can only choose one of them to wade.

Why is China Eastern Airlines taking the lead in such a strategic cooperation?

"Our top management is really resilient and has worked for many years." An insider of China Eastern Airlines, who did not want to be named, disclosed to the 21st century economic report that as early as the opening of Wuhan Guangzhou high-speed railway at the end of 2012, Liu Shaoyong went to experience the high-speed rail. When he came back, he followed the senior executives of the group. Although high-speed rail will bring severe challenges to the aviation market of medium and short-term flights, aviation and high-speed rail will be new market opportunities. Therefore, China Eastern Airlines actively connects with the railway department, To seek cooperation, Shanghai Railway Bureau initially broke through the situation and launched "air rail link" products, but this product did not really realize the docking of sales systems of both sides.

After years of running in, on September 25, 2019, when Daxing airport was officially put into operation, Liu Shaoyong attended the activities of Daxing airport in the morning and signed a strategic cooperation agreement between the two groups in the afternoon, including the concept of innovative intermodal products and joint ticket sales.

"The chairman came back after us to implement the strategic agreement." Shangguan Xuemin recalled that under the promotion of the high-level of both sides, China Eastern Airlines and 12306 started the technical research on system interconnection for the full opening and docking of the direct selling platforms of both sides, intensively sorted out the service process specifications and further optimized the service details. He revealed that the process of cooperation between the two sides is also the process for civil aviation and railway transportation enterprises to understand each other's technical interface standards and ticket rules. After the two sides successfully run in, 12306 will be able to connect with other airlines' interfaces in the future.

It was revealed that the strategy was formulated by the two sides and the SMRC. The first stage is that passengers can freely choose the flight and train itinerary on the app of both sides. After that, when the operation is mature, China Eastern Airlines and China Railway will jointly design a customized connection scheme. In the third stage, based on the recommendation of the joint travel scheme, both sides of the air rail company select the optimal shift, give price concessions, give special points and promise specific services, that is to say, marketing and promotion are done together.

"The Ministry of communications and the Civil Aviation Administration are also paying close attention to the pilot projects of our two sides, and will promote them to the whole industry depending on the effect." Shangguan Xuemin disclosed to the 21st century economic report that the direct connection of ticket selling systems of the two passenger transport systems is the first to carry out the experimental integrated travel scenario in Hongqiao comprehensive transportation hub, which can be realized in more airport + high-speed rail complex transportation hubs in the future. For example, Beijing Daxing International Airport, Chengdu Shuangliu Airport and Pudong Airport complex transportation hub.

At present, the wave of digital transformation of aviation industry is coming. The application of artificial intelligence, big data, cloud computing and Internet of things is becoming the main melody of airline digital transformation, and the epidemic situation has accelerated the pace of transformation.

China Eastern just quickened its pace to keep up with it. What about other airlines?