Air China

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Air China

Not to be confused with China Airlines, the national airline of the Republic of China (Taiwan).

Air China Ltd (, ) (Pinyin: Zhōngguó Guójì Hángkōng Gōngsī, literally "Chinese International Aviation Company", abbreviated 国航) is the People's Republic of China's state owned and second-largest commercial airline after China Southern Airlines. It is the flag carrier and the only airline to fly the national flag on its entire fleet. Its logo consists of a phoenix in the form of the acronym VIP, and "Air China" in both English and Chinese, which was autographed by Deng Xiaoping. It operates 5,090 flights each week worldwide and is also the 18th largest airline in the world by fleet size.

Air China's main hubs are Beijing Capital International Airport, Chengdu Shuangliu International Airport and Shanghai Pudong International Airport, with other focus cities at Hangzhou Xiaoshan International Airport, Chongqing Jiangbei International Airport, Tianjin Binhai International Airport and Hohhot Baita International Airport. Out of all Asian airlines, Air China currently flies to approximately 120 destinations; the most destinations from its own Beijing hub.

The airline flew 33.97 million passengers in 2006, with a passenger load factor of 75.9%. In the same year, it made a profit of 2.7 billion yuan, with an operating revenue of 44.9 billion yuan and total expenses standing at 42.4 billion yuan.

It is the 4th largest airline in Asia, 5th largest in the world in terms of domestic cargo traffic and 17th largest airline in the world by terms of fleet size.

History

Beginning

Air China was established on July 1, 1988. Its formation was a result of the government's decision to split the operating divisions of Civil Aviation Administration of China (CAAC) into separate airlines. The CAAC was restructured in late 1987 and divided into six airlines, namely Air China, China Eastern, China Southern, China Northern, China Southwest, and China Northwest. Air China, based in Beijing, was given chief responsibility for intercontinental flights, and took over the CAAC's long haul aircraft (Boeing 747s, 767s, and 707s, as well as medium-haul 737s) and routes when it was granted its autonomy on July 1, 1988.

At the time of its launch 1988, Air China had 6,000 employees and served 31 international and 30 domestic destinations. It was China's largest airline company and the national flag carrier. In 1989, Air China posted a net profit of $106 million on revenues of $383 million. In that same year, Air China entered a joint venture with Lufthansa, which provided 40 percent of the capital, or $220 million, to create the Beijing Aircraft Maintenance Center (Ameco Beijing). It specialized in the upkeep of the Boeing aircraft that comprised Air China's fleet. The venture was expanded with another $218 million (¥n1.2 billion) in 1992. Ameco Beijing employed nearly 4,000 people, a little fewer than 50 of them from Lufthansa. Air Transport World reported the company preferred to source its needs through joint ventures due to the country's lack of hard currency. Its Beijing Air Catering was 40 percent owned by a large Hong Kong caterer.

Deregulation

Further deregulation of the aviation business took place in 1994, enabling foreign investment in airports and facilitating the import of aircraft built outside mainland China. By 1996 the country had 108 airports with scheduled airline services and around 30 different airlines. In 1997, Air China reported sales of $1.38 billion (¥n11.5 billion). The fleet had grown to 65 aircraft and the carrier was flying 144 routes overall. By October 1997, Air China was planning a public stock offering. China Eastern Airlines and China Southern Airlines had listed on the Hong Kong and New York exchanges earlier in the year. Air China delayed plans based due to poor financial performance and a downturn in business caused by the Asian financial crisis. About 16 million passengers flew Air China in 1998.

Early in 2000, Air China teamed with China National Aviation Co. Group (CNAC), the CAAC's Hong Kong-listed commercial arm, to establish a Hong Kong branch (95% owned by Air China). Direct flights to London from Hong Kong soon began. Air China faced competition at its home base from Air France, which increased its four flights a week to Beijing, begun in 1997, to daily service. British Airways also wanted to increase its frequencies (it was operating 18 flights a week to China).

Consolidation

In mid-2000, the CAAC repeated earlier calls for a consolidation of the ten airlines it controlled into three. (Air China, China Southern, and China Eastern were to each acquire the smaller airlines.) However, the CAAC blocked a proposed merger in September 2000 between Air China and China Southern on anti-competitive grounds.

In January 2001, the CAAC's ten airlines announced they had agreed on a merger plan. Air China was to acquire China Southwest Airlines and China International Airlines, the country's fourth strongest domestic airline. This was to create a group with assets of ¥n56 billion (HK$ 52.5 billion), including 118 aircraft. On October 28, 2002, Air China consolidated with China National Aviation Corporation and China Southwest Airlines.

During 2004, Air China absorbed Zhejiang Airlines (a subsidiary of CNAC). On 15 December 2004 the company listed its shares on the Hong Kong and London Stock Exchanges. Air China has shareholdings in Air China Cargo (51%), Air Macau (51%) and also holds majority shares of Shandong Airlines. On June 9, 2006, a joint announcement revealed a new shareholding structure in which Air China will acquire a 17.5% stake in Cathay Pacific, while the latter will own 20% of the former.

There are still ongoing plans for further consolidation of the Chinese airline industry and Air China will likely continue to play an important part in these plans.

Operations

Air China operates in four segments:

Airline Operations segment, which comprises the provision of air passenger and air cargo services;
Engineering Services segment, providing aircraft engineering services, such as aircraft maintenance, repair and overhaul services;
Airport Terminal Services segment, offering ground services that include check-in services, boarding services, premium class lounge services, ramp services, luggage handling services, loading and unloading services, cabin cleaning and transit services,
Others segment, which comprises the provision of air catering services and other airline-related services.

Subsidiaries

Air China Cargo, flight logistics company
Air China Business Jet, business jet company

Financial performance

For fiscal year ending December, 2006:

Sales: $5,747.4M
One year growth: 21.1%
Net income: $422.7M
Income growth: 38.1%

Destinations

Air China's route network extends from China to Asia, Middle East, Western Europe, and North America. The majority of the routes operate from its Beijing hub.

Today, Air China is increasing its international presence, starting service on 13 new routes between 2008/9. Recently, Air China has upgraded service to Vancouver with an A330-200. After the launch of the new Beijing-Dubai-Athens route, it is considering upgrading the route with A330-200. Service to Warsaw, Poland nonstop from Beijing will be historic, as Air China will be the first international airline to opearte long haul flights to Warsaw, besides LOT, a Star Alliance partner, offering 7 flights per week instead of LOT's 3 (end June 2008).

Air China New Destinations and New Frequencies
Route	Aircraft	Frequency
Beijing-Paris-Athens	A330-200	2 Weekly
Beijing-Dubai	A330-200	4 Weekly
Beijing-Xiamen-Jakarta	Boeing 737-700	2 Weekly
Beijing-San Francisco	Boeing 747-400 Combi	5 Weekly
Beijing-Urumqi-Kuwait	A319	2 Weekly
Beijing-Madrid	A330-200	3 Weekly
Beijing-Munich	A330-200	4 Weekly
Beijing-Pyongyang	B737-300	2 Weekly
Beijing-Frankfurt (CA 965/6)	A330-200	5 Weekly
Beijing-Sydney	A330-200	4 Weekly
Beijing-Shanghai-Melbourne	A330-200	4 Weekly
Beijing-Delhi	Boeing 767-300	Daily
Beijing-Shanghai-Sendai	Boeing 737-300	4 Weekly
Beijing-Kunming-Yangon	Boeing 737-700	3 Weekly
Chengdu-Lhasa-Kathmandu	A319	2 Weekly
Beijing-Macau (Seasonal)	Boeing 737-800	Daily
Beijing-Bangkok (Seasonal 2md Daily)	Boeing 737-800	Daily
Chengdu-Bangkok	Boeing 737-600	5 Weekly

On December 10, 2006, it made its first flight to São Paulo (via Madrid), which became its first South American destination. The service began with the Boeing 767-300 aircraft but because of its popularity, the service has been upgraded to A330-200. However, Air China ended service to Sao Paulo in September 2008. This was Air China's longest route.

Routes to Australia, Frankfurt, Madrid currently operated by Airbus A330-200 may be replaced by Boeing 787 Dreamliners. The Boeing 787 Dreamliners will be used on flights to Toronto and Washington, D.C. when they are launched.

Air China is launching many flights to European destinations, as it believes these services will become very popular in the coming years. The airline has already stated they are happy to make losses on these routes at first, but hopefully they will build up a good brand image in Europe, so as to make them a premier choice for those flying to China.

Fleet

Passenger

As of September 2008, Air China fleet includes the following aircraft:

Air China Fleet
Aircraft	Total	Passengers (First/Business/Ecomomy)	Routes	Notes
Airbus A319-100	33 (2 orders)	128 (8/120)	Domestic, Asia
Airbus A320-200	6	164 (8/156)	Domestic, Asia
Airbus A321-200	6 (18 orders)	185 (16/169)	Domestic
Airbus A330-200	19 (21 orders)	283 (12/271) 240 (36/215)	Domestic, Sydney, Melbourne, Frankfurt, Paris, Vancouver, Madrid, Hong Kong, London (seasonal), Stockholm, Dubai, Athens, Munich.	Features new business class Two in Star Alliance Livery (B-6091, B-6093)
Airbus A340-300	6	255 (8/28/219)	Domestic, Rome, Milan, Frankfurt, London-Heathrow (seasonal)	Features new first and business class
Boeing 737-300	41	128 (8/120)	Domestic, Fukuoka, Ho Chi Minh, Osaka, Pyongyang.
Boeing 737-600	6	110 (8/102)	Domestic
Boeing 737-700	20	126 (8/118)	Domestic, Asia
Boeing 737-800	46 (44 orders)	167 (8/159)	Domestic, Asia	B-5176 in Olympic livery
Boeing 747-400	4	344 (10/42/292) 346 (10/42/294)	Domestic, Shanghai, Frankfurt, New York-JFK	Features new first and business class
Boeing 747-400M	8	307 (18/40/249) 280 (10/24/246)	Los Angeles, San Francisco, Paris-CDG, Rome-Fiumicino, Frankfurt, London (Seasonal)	Being retrofitted to feature new first and business class
Boeing 757-200	12	200 (8/192) 201 (8/193)	Domestic, Asia
Boeing 767-200ER	3	214 (18/196)	Domestic, Dubai	To be phased out by 2008
Boeing 767-300	3	225 (10/26/189)	Southeast Asia	To be phased out by 2010
Boeing 767-300ER	3	225 (10/26/189)	Delhi, Singapore	To be phased out by 2010
Boeing 777-200	10	345 (49/296) 314 (12/49/253)	Domestic, Seoul-Incheon, Tokyo-Narita, Singapore, Munich, Moscow
Boeing 777-300ER	(15 orders)	Unknown	Los Angeles, New York-JFK, San Francisco, Frankfurt, Warsaw (When Launched)	Entry: 2011
Boeing 787-8	(15 orders)		Sydney, Toronto, Washington DC, Warsaw (When Launched)	Entry into service: Fourth Quarter 2009

Cargo fleet

As of January 2008, Air China's average fleet age was 7.8 years old.

Air China has two other business jets: one Gulfstream IV and one Bombardier Learjet 45.

Aircraft orders

Air China has signed agreements with:

Airbus, on July 21, 2005, for the purchase of 20 Trent 700 powered Airbus A330-200 aircraft, scheduled for delivery from May 2006.
Boeing, on August 8, 2005, for the purchase of 15 Boeing 787 aircraft for delivery from mid-2008 to end 2010. Sources also report that Air China may even become the 2nd carrier to take delivery of the Boeing 787-8, shortly after All Nippon Airways.
Airbus, on June 2006, for the purchase of 24 Airbus A320s. These aircraft are to be delivered between 2007 and 2010. However, Air China has no plans to order the Airbus A380 in their fleet, because they think that it just makes more sense by using one kind of Jumbo jet. Before, Airbus has stated that Air China were to be the next few customers to order the A380, however, it may order the A380 superjumbo since they did not have a plan to rule out purchases of the big Airbus plane in the future.
Airbus, Again in 2008, Air China bought 20 Airbus A330 aircraft, scheduled to be delivered in 2011 - 2014 to meet expected growth and demand. This will expand its capacity up to 16.5% and to replace their Boeing 767s.
Boeing, On July 16, 2008, purchase of 45 Boeing aircraft consisting of 15 Boeing 777-300ERs and 30 Boeing 737-800s, scheduled for delivery in 2011-2015 for a capacity expansion of 35%.

While Boeing's orders page for 2006 reflects this order, there have been no formal news releases indicating the following:

Boeing, on January 17, 2006, for the purchase of 10 Boeing 737-800 aircraft for delivery from end 2007 to end 2008.

Previously operated

Passenger Fleet

Antonov An-12 (1988 1997)
Boeing 707 (1988 1996)
Boeing 747SP (1988 1999)
BAe 146 (1992 2003)
Hawker Siddeley Trident (1988 1994)
Tupolev Tu-154B (1988 1997)
Xian Y-7 (1989 1996)

Cargo Fleet

Lockheed L-100 Hercules (1988 2001)

Codeshare agreements

Air China officially joined Star Alliance on December 12, 2007. This move greatly expanded the Alliance's presence in China.

With the Alliance's "Under One Roof" initiative, all Star Alliance members have moved their operation to the Terminal 3 of the Beijing Capital International Airport, Air China's main international hub. This new terminal is divided into 3 sections, with T3C housing all domestic flights operated by Air China and Shanghai Airlines and T3E housing all Star Alliance international flights. The two sections are connected by a high-speed inter-terminal train.

As of April 2008, Air China had codeshare agreements with the following airlines:

Air Canada (SA)
Air Macau
Air New Zealand (SA)
Alitalia
All Nippon Airways (ANA) (SA)
Asiana Airlines (SA)
Austrian Airlines (SA)
Avianca
British Airways
Cathay Pacific Airways
China Eastern Airlines
China Southern Airlines
Dragonair
Finnair, flights operated by Finnair
Korean Air
Kuwait Airways, flights operated by Air China on the Kuwait-Karachi-Beijing route
LOT Polish Airlines (SA)
Lufthansa (SA)
Qatar Airways, all routes operated by Qatar Airways
Scandinavian Airlines System (SAS) (SA)
Shandong Airlines(Air China subsidiary)
Shanghai Airlines (SA)
Turkish Airlines (SA)
United Airlines (SA)
US Airways (SA)
Virgin Atlantic Airways

Former codeshare agreements

Northwest Airlines (began 1996, terminated in 2002): Detroit to Beijing and Shanghai (operated by Northwest Airlines). After NWA terminated non-stop flights to China, Air China decided to terminate the codeshare between the two airlines.
Qantas (began 2006, terminated 2008): Blocked Codeshare on Qantas' Beijing-Sydney route. After Air China initiated non-stop Beijing-Sydney service, Air China has terminated the Qantas Codeshare.
Varig (suspended in 2006 due to collapse): Beijing to Frankfurt (operated by Air China) and Frankfurt to São Paulo (operated by Varig). However, Air China itself began flying to São Paulo via Madrid in December 2006.

Air China Companion

Air China Companion is the frequent flyer program for Air China. This is the first frequent flyer program to be launched in China. It was designed to allow frequent flyers travelling internationally and domestically with Air China and its partner airlines.

Members earn accumulated mileage points for awarded tickets on Air China and other partner flights. There are flight mileages and partner mileages. Flight mileages are for members flying with Air China while partner mileages are for members taking Partner Airlines of Air China. The companion card may be upgraded to VIP status. There are special redemption rates for VIP members Gold card members and Platinum card Members.

Gold card members: members will earn 25% mileage bonus on credited flight mileage.
Platinum card members: members will earn 50% mileage bonus on credited flight mileage.

Partners

In addition to its Star Alliance partners, Air China has frequent flyer partnerships with the following airlines:

Incidents and accidents

On April 15, 2002, Flight 129, a Boeing 767-200ER from Beijing to Busan, South Korea, crashed into a hill while trying to land at Gimhae International Airport during inclement weather, killing 128 of the 166 people on board. This is the only accident with fatalities involving Air China.

On March 13, 2005, the right main gear wheels of an Air China Boeing 747-400 at LAX, sank deeply into asphalt at the edge of the taxiway as it turned on to runway 25R for take-off. The aircraft was immobilized and the runway had to be closed for 13 hours before the aircraft could be pulled free.

On January 6, 2007, the left wing of an Air China Boeing 747-400 bound for Beijing clipped the tail section of a Delta Air Lines plane while pushing back from the gate at John F. Kennedy International Airport, New York. No injuries were initially reported among the 215 passengers or 23 crew members aboard the Air China plane, the Delta Air Lines aircraft was empty of passengers at the time. This incident is under investigation by the US Federal Aviation Administration.

On July 1, 2007, the nose gear of an Air China Boeing 767-200ER was accidentally retracted while the aircraft was at a gate at Beijing Capital International Airport. There were 2 injuries onboard and no fatalities.

On July 8, 2008, Air China Flight 103 from Tianjin bumped into an engineering vehicle at Hong Kong International Airport shortly after landing. There were no injuries; however, the wing of the aircraft was slightly damaged after the collision.