News and Research on China Eastern Airlines Corp. Ltd. (CEA)
Business Description
China Eastern Airlines Corporation Limited provides passenger, cargo, and mail delivery and other extended transportation services. The company, as of December 31, 2006, had a fleet of 205 aircraft, including 182 jet passenger aircraft that have approximately 100 seats; and 12 jet freighters.
The company’s Airbus A340-300 and A340-600 aircraft are primarily used for its routes to the United States, Europe, Hong Kong, Korea and other international destinations, including Los Angeles, New York, London, Paris, Seoul, and Bangkok, and on major domestic routes to cities such as Dalian. Its Airbus A330 aircraft are primarily used for the routes of Beijing-Shanghai and Shanghai-Hong Kong and Singapore, Australia, India, Japan and Korea routes. The company’s Airbus A320, MD-90 and Boeing B737 aircraft are suitable for middle and short distance flights and are primarily used for its domestic routes. The company’s EMB145 and CRJ-200 aircraft are mainly used on regional short-distance routes. Its MD-11F, A300F and B747F aircraft are used for cargo operations and carry cargo to the United States, Europe and Japan. Its general aviation services customers include provincial authorities in charge of agriculture, forestry and geology.
The company operated approximately 5,650 scheduled flights per week (excluding charter flights), serving a route network that covers 136 cities with in China and abroad. In 2006, the company operated approximately 423 routes. The company, in 2006, operated approximately 4,480 domestic flights per week on 299 routes. Its heavily traveled domestic routes link Shanghai to the large commercial and business centers of China, such as Beijing, Guangzhou and Shenzhen.
The company, in 2006, also operated approximately 460 flights per week on 19 routes to and from Hong Kong, originating from Shanghai and 18 other major cities in eastern, northern and western China. The company, in 2006, operated approximately 710 international flights per week on 105 routes, serving 43 cities in 17 countries, primarily linking Shanghai to major cities in Asian and Southeast Asian countries, such as Japan, Korea, India, Singapore, Thailand and Bangladesh; and certain strategic locations in Europe, the United States and Australia.
The company, in 2006, introduced passenger traffic routes, such as Shanghai-Frankfurt, Shanghai-New York, Beijing-Seoul, Hangzhou-Qingzhou and Weihai-Seoul. In April 2007, the company introduced a new international route, Shanghai-Maldives-Johannesburg. Its most of its international and Hong Kong regional flights and a substantial portion of its domestic flights either originate or terminate in Shanghai. Its operations in Shanghai are conducted primarily at Hongqiao Airport and Pudong International Airport.
The company operates most of its flights through its three hubs located in eastern, northwestern and southwestern China, namely Shanghai, Xi’an and Kunming, respectively. In addition, the company is also in the process of developing its operations in Beijing and Guangzhou as its principal bases for northern China and southern China, respectively.
Code-Sharing Arrangements
The company has entered into code-sharing arrangements with American Airlines, Japan Airlines, Korean Airlines, Asiana Airlines, Qantas Airways, Air France, Thai Airways, Air Europa and Shanghai Airlines.
Ground Facilities and Services
The company’s center of operations is Shanghai. Its Shanghai operations are based at Hongqiao Airport and Pudong International Airport. The company also operates from various other airports in China, including Yaoqiang Airport in Jinan, Lukou Airport in Nanjing, Liuting Airport in Qingdao, Luogang Airport in Hefei, Changbei Airport in Nanchang, Wushu Airport in Taiyuan, Zhengding Airport in Shijiazhuang, Lishe Airport in Ningbo, Tianhe Airport in Wuhan, Wujiaba Airport in Kunming and Xianyang Airport in Xi’an. The company owns hangars, aircraft parking and other airport service facilities at Hongqiao Airport and Pudong International Airport and leases from CEA Holding certain buildings at Hongqiao Airport where its principal executive offices are located.
The company has its own ground services and other operational services, such as aircraft cleaning and refueling and the handling of passengers and cargo for its operations at Hongqiao Airport and Pudong International Airport. The company also provides ground services for many other airlines that operate to and from Hongqiao Airport and Pudong International Airport. In-flight meals and other catering services for the company’s Shanghai-originated flights are provided primarily by Shanghai Eastern Air Catering Limited Liability Company, a joint venture company affiliated with CEA Holding. It contracts with local catering companies for flights originating from other airports.
The company’s direct domestic ticket sales are handled primarily at its ticket counters located at Hongqiao Airport and Pudong International Airport in Shanghai and in Anhui, Jiangsu, Zhejiang, Jiangxi, Shandong, Shanxi, Hebei, Hubei, Yunnan and Shaanxi provinces, as well as at the airports in Beijing, Chengdu, Fuzhou, Guangzhou, Hangzhou, Ningbo, Shenzhen, Xiamen and Yantai. The company maintains overseas representative offices in Chicago, Los Angeles, Seattle, New York, Vancouver, Madrid, Paris, London, Frankfurt, Munich, Moscow, Sydney, Melbourne, Tokyo, Osaka, Nagasaki, Fukuoka, Nagoya, Okinawa, Niigata, Sapporo, Kagoshima, Hiroshima, Okayama, Matsuyama, Singapore, Bangkok, Seoul, Delhi, Kuala Lumpur and Hong Kong.
The company has also entered into membership agreements with several international reservation systems, including ABACUS, the computer reservation system in southeast Asia, TOPAS of Korea, SABRE, GALILEO and WORLDSPAN of the United States, AMADEUS of Europe, and INFINI and AXESS of Japan.
Cargo Operations: The company maintains a network of cargo sales agents domestically and internationally. It established domestic cargo sales offices in Beijing, Shanghai, Xiamen and other major transportation hubs in China, and international cargo sales offices in Hong Kong, Tokyo, Seoul, Dallas, Seattle, Chicago, San Francisco, New York, Paris and its other overseas flight destinations.
Ancillary Airline Activities
The company, in addition to airline operations, also offers tickets on behalf of other airlines. It also provides airport ground services for airlines operating to or from Hongqiao Airport and Pudong International Airport, including aircraft cleaning, loading, unloading, storage and ground transportation of cargo and passenger luggage.
Joint Ventures
The company, in May 2002, jointly with Shanghai Civil Aviation Eastern China Kaiya System Integration Co., Ltd., established Shanghai Eastern Airlines Investment Co., Ltd., or SEAI. The company holds a 99% equity interest in SEAI. SEAI serves as one of the investment vehicles of the company for its investments in other industrial projects and provides consulting services.
The company, as of March 10, 2003, entered into a joint venture agreement with Singapore Technologies Aerospace Ltd. to establish Shanghai Technologies Aerospace Company Limited, or STA, a Sino-foreign joint venture limited liability company established under the laws of the PRC. STA is primarily engaged in the provision of commercial aircraft maintenance, repair and overhaul services.
The company, in December 2003, also entered into a joint venture agreement with CEA Holding to establish China Eastern Air Catering Investment Company Ltd., or CEA Catering. CEA Catering is primarily engaged in the business of providing air and ground catering services, food and beverage supplies and other related services.
The company, as of February 18, 2004, entered into a joint venture agreement with CEA Holding to establish China Eastern Real Estate Investment Co., Ltd., or CEA Real Estate, a limited liability company established under the laws of the PRC. CEA Real Estate is primarily engaged in the real estate business, including the development and sales of commercial premises and property leasing in Shanghai, China.
The company, as of August 18, 2004, entered into a joint venture agreement with China Ocean Shipping (Group) Company and China Cargo Airlines Co., Ltd. to establish Shanghai Eastern Logistics Co., Ltd., or Eastern Logistics, a limited liability company established under the laws of the PRC. The company, directly and indirectly, owns a 70% equity interest in Eastern Logistics. Eastern Logistics is primarily engaged in the provision of cargo logistics services.
Suppliers
The company’s primary supplier includes The Civil Aviation Oil Supply Company, or CAOSC, which is controlled by the CAAC.
Competition
Domestic: The company’s principal competitors in the domestic market are China Southern Airlines Company Limited and Air China Limited. The company also faces domestic competition from Shanghai Airlines, an airline based in Shanghai.
Hong Kong: The primary competitor on its Hong Kong routes is Hong Kong Dragon Airlines Limited, or Dragonair; Cathay Pacific Airways Limited; and Air Macau.
International: The company competes with Air China, All Nippon Airways, Japan Airlines, Shanghai Airlines, China Southern and Northwest Airlines, Inc. on its passenger routes to Japan. On its Korean routes, the company competes with Asiana Airlines, Korean Air, China Southern and Air China. The company’s primary competition on its flights to Southeast Asia comes from Thai Airways International, Singapore Airlines and China Southern. On its passenger flights to the United States, its principal competitors include Northwest Airlines, Inc., United Airlines, American Airlines, Air China and China Southern. On its European routes, its competitors include Air China, the Air France-KLM Group, Virgin Atlantic Airways, British Airways and Lufthansa German Airlines. The company competes with Air China and Qantas Airways Ltd. on its Australian routes.
History
China Eastern Airlines Corporation was founded in 1988.
