As part of its plans to establish itself as a major global airline, China Southern this week signed a “strategic cooperative agreement” with Tourism Australia and four Australian airports.
The Guangzhou-based airline, which in fleet size is the third biggest carrier in the world, currently flies into Sydney, Melbourne, Brisbane and Perth, but will add Cairns on a trial basis later this year.
The agreement signed on Wednesday in China is designed to build on the recently announced ‘Canton route’ between Australia and Europe, which is being promoted as an attractive alternative to the Kangaroo route.
The airline currently flies between Guangzhou and London three times a week, connecting with evening flights from Sydney and Melbourne to provide an almost seamless service that will take around 26 hours.
But from the end of October China Southern will fly from Guangzhou to London daily establishing the Canton route as a genuine alternative for Australians heading for Europe.
The airline, which has been operating into Australia for 10 years now, also flies from Guangzhou to Paris and Amsterdam.
The promotion of the Canton route has the support of the Chinese regulator, the CAAC, and the regional government; and is described as part of China Southern’s “integration into the international marketplace”.
The concept will need significant promotional investment to succeed in attracting Australians away from the established hubs.
China Southern has no problem getting the Chinese on board heading south – it will carry around 600,000 this year and may reach one million by 2020.
But Guangzhou doesn’t yet figure significantly on the Australian radar and the airline will need to be price sensitive with its fares for the time being.
The problem is that price is not the deciding factor for the business traveler market where the bigger margins are to be had.
China Southern’s president and CEO, Mr Tan Wangeng, admitted Wednesday that service quality is the biggest challenge on the Canton route right now; though he believes the airline may have an edge over Qantas and others in terms of premium product.
The airline will operate the A330 on the Canton route for the time being, but Mr Tan said that his team was investigating the possibility of using the A380 for at least some services.
The strategic cooperative agreement was signed by Cam MacPhee for Brisbane Airport, David Bell for Sydney Airport, Damien Tklac for Melbourne Airport and Brian Krause for Perth Airport.