ASCEND I PROFILE y most accounts, the first double-digit passenger traffic growth from decade of the 21st century 2004 through 2010, according to the Civil presented unprecedented chal- Aviation Administration of China (CAAC). While lenges for the global airline that growth has slowed during the last two industry worldwide. In fact, years, it is still the highest in the world. Total manyB industry analysts have labeled the first profits for China’s airline industry in 2011 alone 10 years of this century as the “lost decade,” are an estimated US$7.2 billion, accounting citing: for more than half the profits of the entire Massive layoffs, worldwide airline industry. Staggering financial losses, Leading the way are China’s “big three” Record numbers of bankruptcies and con- carriers — Air China, China Southern Airlines solidations, and China Eastern Airlines, followed by a Skyrocketing fuel prices, strengthening number of second-tier carriers. Declining consumer confidence, While expansion has been a major focus Widespread service disruptions attributed to of China’s aviation industry during the first pandemics, volcanic ash and wild weather decade, flexibility — the ability to adapt quickly patterns. to the volatile marketplace — continues to be Along with the challenges, the decade also a priority. brought myriad opportunities for the industry. China Eastern was the first Chinese civil The tragic events of Sept. 11, 2001, in the aviation company to be listed simultaneously United States, it appears, were the first of on the Hong Kong, New York and Shanghai many catalysts that drove airlines worldwide stock exchanges. It has carefully and success- to evaluate and fundamentally restructure the fully navigated the industry’s last few turbulent way they do business. Rising costs and declin- years by optimizing and integrating resources, ing passenger traffic forced debt-laden carriers including technology. The carrier developed to pare down or dismantle vast networks and implemented specific yet flexible strate- A Famous Chinese Brand and fleets. It accelerated the growth of alli- gies, and it effectively responded to changes ances and joint ventures to more economically in the marketplace. reach destinations airlines had once served on Headquartered in Shanghai, the country’s China Eastern Airlines Faces A Challenging Aviation Environment Head On their own. Low-cost and second-tier carriers business center, China Eastern serves nearly emerged as strong competitors, offering niche 70 million passengers annually and is among services to targeted audiences. the world’s top-10 carriers based on passenger While most of the industry struggled traffic statistics. Its fleet of 380 wide- and By Lauren Lovelady | Ascend Staff to survive, a few regions and even more narrow-body aircraft and more than 35,000 specifically, carriers, thrived. In particular, employees serve 197 destinations throughout China’s civil aviation industry experienced China, Asia, Europe, North America and Oceania. China Eastern Airlines is in it for the long haul. Its strategic management style combined with its new membership in the SkyTeam alliance and acquisition of Shanghai Airlines only 15% scratches the surface for this successful Chinese carrier. 70% A Successful Chinese Airline China Eastern serves nearly 70 million passengers annually with its fleet 15% of 380 wide- and narrow-body aircraft and more than 35,000 employees. The carrier serves 197 destinations in all corners of the world. Photos: Shutterstock ascend 19 ASCEND I PROFILE ASCEND I PROFILE Overseen by the CAAC, China Eastern plays a 1.5 billion yuan (US$238 million). We’ve done To minimize market-share loss, the carrier has customer-service focus continue to be rewarded vital role in the country’s economy. what once would have been inconceivable.” increased flight frequencies, streamlined passenger and recognized. “China Eastern’s international routes While domestic travel — traditionally shielded check-in, created dedicated check-in counters and Last year, the carrier was named one of the promote political and business contacts from foreign competition — has long been the security channels, and implemented accelerated most innovative Chinese companies by Fortune between China and other countries and mainstay of China’s airline industry, developing baggage claim on its busiest air travel routes, includ- China magazine in its 15th anniversary issue. The encourage both inbound and outbound aviation infrastructures and regulatory reforms ing Beijing-Shanghai. Additional services such as magazine, in cooperation with research institutes, tourism, as well as provide convenient are enabling the country’s carriers to more online check-in and advanced booking capabilities comprehensively evaluated the financial status of service for leisure travelers,” said Mr. effectively compete internationally. are now offered to help retain business traffic. 500 Chinese companies on the mainland and Hong Liu Hao, general manager of the airline’s China Eastern expanded its global presence last Ironically, railway officials signed an agreement Kong based on factors such as industry differences, network and revenue management depart- year, becoming the 14th member of the SkyTeam last year with China Eastern to integrate services in industry cycles and investment strategies to develop ment and marketing and sales committee. airline alliance, along with Shanghai Airlines. The the future. Under the agreement, travelers will be the final list of 25 companies. In addition, China “Domestically, we meet the economic addition of China Eastern and Shanghai solidifies able to book tickets for both airlines and HSR trains Eastern’s trademark logo was officially recognized development requirements of all parts of SkyTeam’s position as the most prominent alliance at a designated China Eastern site and transfer from as a “famous Chinese brand.” the country, not just the demand for travel for the greater China region and brings 32 new railways to airplanes without using other types of Dedicated to building a top-quality service brand, from passengers in the big cities. And we destinations into the global network. In turn, the transportation. China Eastern aims to be a “superb airline company drive local employment and economies.” carriers’ customers have greater access to travel Although China’s aviation industry has entered a that is cherished by staff, preferred by customers, For its part, China Eastern continually options worldwide, as well as additional oppor- period of slower growth largely due to global eco- satisfactory to shareholders and trusted by society.” evolves to meet the challenges and capital- tunities to earn and redeem frequent flyer miles nomic pressures and high fuel prices, the demand As such, the airline served as the official carrier ize on opportunities. throughout the alliance network. for air travel, especially within the country, continues of the 2010 World Expo in Shanghai, transporting “We’ve faced many challenges during Until last year, China Eastern had been the only to be strong, despite the impact of high-speed travelers worldwide during the six-month event. the last 10 years,” said Mr. Hao, “par- one of the country’s top three airlines not associ- rail. Citing such conditions, last fall China Eastern Its exemplary Expo cabin service was awarded ticularly in the areas of long-haul route ated with a global alliance. Industry analysts believe canceled an order for 24 Boeing 787 Dreamliners the Expo City Star prize by the Bureau of Shanghai operation, brand management, and enter- alliance membership will help the airline fend in favor of the smaller Boeing 737 planes. The World Expo Coordination. prise management and control. off competitors and create additional efficiencies carrier will take delivery of 45 737s between 2014 Last year, the airline also participated in world- “To assist with our long-haul operations, and cost savings by sharing resources with other and 2016. It also returned five Airbus A340-300s wide humanitarian efforts, including the operation of we’ve focused on the construction of a members. in exchange for 15 smaller wide-body Airbus A330 charter flights to evacuate people from earthquake- rich hub route network and increased the Competition, however, is no longer limited to aircraft. devastated Japan and war-torn Libya. products and fares we offer, as well as airspace. High-speed rail was introduced in China “We are not optimistic about the international To ensure its long-term survival and continued expanded the coverage of product and fare in 2007, and by 2020, it is expected to cover market in the next two years, for the weakening glob- success, China Eastern is focused for the foresee- releases. We’re also building our sales chan- more than 16,000 miles within the country’s bor- al economy hurts air travel,” said Mr. Luo Zhuping, able future on strategies related to five key areas of nels, including increasing the proportion of ders, thanks to a multi-billion-dollar investment secretary of the board of China Eastern. “We are its business: direct marketing, advertising and sales.” in the project by the Chinese government. Both making rapid moves to serve domestic demand, Hub networks, Careful attention to brand management highly acclaimed and criticized, it is an attractive which is still robust at the moment.” Cost control, has also become essential. alternative to air travel and a challenge to airlines Despite the ongoing volatility of the global Brand management, “The establishment, interpretation and with extensive domestic networks, such as China economy and aviation industry, China Eastern has Lean management, connotation of the China Eastern brand is Eastern. remained strong. Its strategic planning efforts and Information construction. important,” said Mr. Hao. “We constantly “In the next five years, our goal is to rank among evaluate the promotion of our brand image the world’s top-10 airlines based on gross income and its associated value.” and revenue passenger miles,” said Mr. Hao. “To In the area of enterprise management, maintain a competitive edge, we must continuously China Eastern focuses on strengthening reform and innovate.