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Airlines - China - September 2015

Airlines - China - September 2015

“Chinese consumers place great importance on efficiency when taking flights. They are most likely to pick an airline based on on-time rate, number of connecting flights and the convenience of transportation from the airport/terminal in addition to price and flight time. Furthermore, Chinese consumers are also most willing to pay more for the taxi reservation/pick-up services offered by airlines, adding evidence to consumers’ high attention to efficiency.”

– Linda Li, Senior Research Analyst

This report covers the following areas:

How to make the frequent flyer programme more attractive?
High efficiency becomes a key demand in air travel
How can international airlines further compete with domestic airlines?


INTRODUCTION
Definition
Methodology
Abbreviations
EXECUTIVE SUMMARY
The market
Figure 1: Forecast of total airline passenger volume, China, 2010-20
Companies and brands
The consumer
Who are likely to be the high-frequency flyers?
Figure 2: Times of travelling by air in the past 12 months, May 2015
Official website is the most popular purchasing channels for both airlines and travel agencies
Figure 3: Channels used when buying plane tickets, May 2015
Chinese consumers focus on travel efficiency, with on-time rate as their top consideration
Figure 4: Consideration factors when choosing flights, May 2015
Consumers most willing to pay for the commute from/to the airport
Figure 5: Services that consumers are willing to pay more for, May 2015
Full-service airlines also have opportunities to introduce “pay what you want” pricing structure
Figure 6: Attitudes towards airlines and air travel, May 2015
Consumers prefer international airlines for long-haul travel and family trips
Figure 7: Preference of domestic and international airlines, May 2015
Airlines have opportunities to offer more convenience via mobile apps
Figure 8: Attitudes towards frequent flyer programmes, May 2015
Meet the Mintropolitans
Key issues
How to make the frequent flyer programme more attractive?
High efficiency becomes a key demand in air travel
How can international airlines further compete with domestic airlines?
What we think
ISSUES AND INSIGHTS
How to make the frequent flyer programme more attractive?
The facts
The implications
High efficiency becomes a key demand in air travel
The facts
The implications
How can international airlines further compete with domestic airlines?
The facts
The implications
MARKET SIZE AND FORECAST
Key points
Volume of airline passengers enjoys a healthy growth over 2010-15
Figure 9: Volume of airline passengers, by segment, China, 2010-15
Figure 10: Volume share of airline passengers, by segment, China, 2010-15
More air traffic volume coming from the West of China
Figure 11: Volume share of total airline passengers in China, by region, 2012-14
Figure 12: Number of civil aviation airports in China, by region, 2012-14
Forecast
Figure 13: Forecast of total airline passenger volume, China, 2010-20
Figure 14: Forecast of mainland airline passenger volume, China, 2010-20
Figure 15: Forecast of Hong Kong, Macau, Taiwan airline passenger volume, China, 2010-20
Figure 16: Forecast of international airline passenger volume, China, 2010-20
Forecast methodology
Key market drivers
Opportunities raised by “One Belt One Road” strategy
Growing demand for leisure travel
Further development in low-cost airlines
Key challenges of growth
The slowdown of Chinese economy
Figure 17: GDP growth rate vs volume growth of airline passengers in China, 2010-15
Even worse flight delay issues
MARKET SHARE
Key points
The “big three” lose shares under severe competition
Figure 18: Market share of airline companies, by passenger volume, China, 2012-14
China Southern Airlines is catching up in the international segment
Figure 19: Volume share of airline passengers of the “big three”, by segment, 2014
Figure 20: Volume share of airline passengers of the “big three”, international segment, 2012-14
Hainan Airlines and Sichuan Airlines have witnessed the largest expansion
COMPANIES AND BRANDS
China Southern Airlines
Figure 21: Main subsidiaries of China Southern Airlines, by 31 December 2014
China Eastern Airlines
Air China
Figure 22: Main subsidiaries of Air China, by 31 December 2014
Hainan Airlines
Spring Airlines
Sichuan Airlines
Juneyao Air
WHO’S INNOVATING?
Key points
Launching themed safety videos to add fun to the flight
Hainan Airlines has pioneered in using jet fuel made from gutter oil
More efficient boarding processes launched by international airlines
International airlines offer more in-flight entertainment through passengers’ mobile devices
THE CONSUMER – FREQUENCY OF FLYING
Key points
Definition of flying frequency
Who are likely to be the high-frequency flyers?
Figure 23: Times of travelling by air in the past 12 months, by age, May 2015
Figure 24: Times of travelling by air in the past 12 months, by demographics, May 2015
Women are taking more flights than before
Figure 25: Times of travelling by air in the past 12 months, by gender, May 2015
THE CONSUMER – CHANNELS USED WHEN BUYING PLANE TICKETS
Key points
More consumers are buying directly from airlines than travel agencies
Figure 26: Channels used when buying plane tickets, May 2015
Most purchases still take place on websites
Figure 27: Channels used when buying plane tickets, May 2015
High-frequency flyers buy more plane tickets via apps
Figure 28: Channels used when buying plane tickets, by flying frequency, May 2015
Figure 29: Purchase channels of buying plane tickets, “via mobile apps”, by gender, May 2015
Consumers from tier one cities rely more on travel agencies
Figure 30: Channels used when buying plane tickets, by city tier, May 2015
THE CONSUMER – CONSIDERATION FACTORS WHEN CHOOSING FLIGHTS
Key points
On-time rate is the top consideration factor
Figure 31: Consideration factors when choosing flights, May 2015
Chinese consumers are efficiency-driven
Opportunity to trade up low earners with more flexible refund conditions
Figure 32: Consideration factors when choosing flights, “The ticket is refundable/changeable”, by monthly
household income, May 2015
Younger consumers value more in-flight catering
Figure 33: Consideration factors when choosing flights, in-flight catering and entertainment-related, by
demographics, May 2015
THE CONSUMER – SERVICES THAT CONSUMERS ARE WILLING TO PAY MORE FOR
Key points
Consumers are most willing to pay for the commute from/to the airport
Figure 34: Services that consumers are willing to pay more for, May 2015
Leverage in-flight Wi-Fi to show the brand as a standard setter
Introduce more ‘local food’ in-flight to entice passengers
Keep consumers most updated when there is a delay
Theme flights may be a good “surprise” for mid- to low-frequency flyers
Figure 35: Services that consumers are willing to pay more for, “Theme flights”, by flying frequency, May
2015
THE CONSUMER – ATTITUDES TOWARDS AIRLINES AND AIR TRAVEL
Key points
Opportunities for airlines to introduce “pay what you want” pricing structure
Figure 36: Attitudes towards airlines and air travel, May 2015
Consumers are paying more attention to in-flight experiences
Figure 37: Attitudes towards airlines and air travel, May 2015
Make more affluent consumers part of the marketing force
Figure 38: Attitudes towards airlines and air travel, “I like sharing my flight experience on social networks”,
by monthly personal income, May 2015
Consumers from the South are more willing to pay for refundable tickets
Figure 39: Attitudes towards airlines and air travel, “I prefer to buy the tickets that are a bit more expensive
but refundable/changeable”, by region, May 2015
THE CONSUMER – PREFERENCES OF DOMESTIC AIRLINES OR INTERNATIONAL AIRLINES
ON DIFFERENT OCCASIONS
Key points
Consumers prefer international airlines for long-haul travel and family trips
Figure 40: Preference of domestic and international airlines, May 2015
Low-frequency flyers are more likely to be indifferent to the airlines
Figure 41: Domestic airlines vs international airlines, “No difference”, by flying frequency, May 2015
THE CONSUMER – ATTITUDES TOWARDS FREQUENT FLYER PROGRAMMES
Key points
Airlines have opportunities to offer more convenience via mobile apps
Figure 42: Attitudes towards frequent flyer programmes, by flying frequency, May 2015
The need to reward medium-frequency flyers
Figure 43: Attitudes towards frequent flyer programmes, by flying frequency, May 2015
THE CONSUMER – MEET THE MINTROPOLITANS
Why Mintropolitans?
Who are they?
Figure 44: Demographic profile of Mintropolitans vs Non-Mintropolitans, by gender, age and personal
income
Figure 45: Demographic profile of Mintropolitans vs Non-Mintropolitans, by marital status, city tier and
education level
Mintropolitans take more flights than non-MinT
Figure 46: Times of travelling by air in the past 12 months, by consumer classification, May 2015
Figure 47: Channels of buying plane tickets, by consumer classification, May 2015
Mintropolitans wants to know more culture background in-flight
Figure 48: Services that consumers are willing to pay more for, by consumer classification, May 2015
Offer unique experiences to attract Mintropolitans
Figure 49: Selected attitudes towards airlines and air travel, by consumer classification, May 2015
APPENDIX: CHINA RESEARCH METHODOLOGY

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