Su-Chien Hsieh, President of China Airlines, says synergies between the group’s many companies will enhance customer services
Are you happy with 2017 performance to date and what are your plans to grow the airline over the next two years?
We turned in a strong performance for both passenger and freight in the first six months of 2017, mainly due to continued network optimization and fleet revitalization efforts.
These, along with relatively low oil prices and growing demand from travel, freight and trade, helped us maintain stable growth.
To boost our operational efficiency, the revitalization of our fleet will continue. Our medium-to-long-range fleet has so far retired all A340-400s.
Fourteen new A350 aircraft should arrive in 2018. As for the narrowbody fleet, we are now assessing the options.
On the network front, our strategy includes adding more services on existing routes, the development of new routes with strong potential, as well as the launching of the London service in December 2017 to expand into new markets.
At the same time, we will continue to work with the SkyTeam alliance and other aviation organizations to provide travelers with more diverse and better-quality services.
In particular, how will you position the airline in the global market?
We believe that airlines play an essential role in the global market by connecting different regions. Airlines bring people together through tourism, travel, business, conferencing, holiday reunions or emergency assistance.
An airline is also an ambassador for their nation. It conveys the culture and values unique to that nation and the business itself.
The CAL Group provides a wide range of services through China Airlines, Mandarin Airlines and Tigerair Taiwan.
We hope these three airline brands will generate group synergies and help us develop the global aviation market
China Airlines embraces its mission of “Flying for you and me” to provide travelers with a full-service flying experience that is both familiar and surprising to all parts of the world.
Mandarin Airlines caters to some of the second-tier cities on regional and cross-strait routes while Tigerair Taiwan operates in the low-cost carrier (LCC) market with a brand identity defined by youth and energy.
We hope these three airline brands will generate group synergies and help us develop the global aviation market.
How important is cargo to your bottom line and how should air cargo processes be transformed?
Both China Airlines’ available freight tonne kilometers (AFTK) and FTKs grew in the first seven months of 2017, the latter by 6.7%. This is a sure sign that we are making progress in hold and capacity management.
Freight revenues from January to July grew 26.2%, and their share of China Airlines’ overall revenues increased to around 30%.
According to IATA’s latest report, China Airlines was ranked eighth in the world by number of electronic waybills
The CAL Group actively promotes freight process management, computerization and paper-free operations.
Node management is practiced in our operating processes and we’ve introduced the e-air waybill (e-AWB) single process for electronic waybills in response to the IATA e-AWB-360 campaign.
According to IATA’s latest report, China Airlines was ranked eighth in the world by number of electronic waybills.
Penetration was 66.9%, exceeding the industry average of 50.2% in July. China Airlines will continue to support the initiative in partnership with other leading airlines to realize the goal of paper-free freight.
Can you keep a core focus on the airline or do your many subsidiaries make running the airline easier or more profitable?
Aviation is our core business. To provide travelers with better quality products and services, we strive to enhance our core services through not only horizontal integration with Mandarin Airlines and Tigerair Taiwan but also vertical integration through aircraft maintenance, ground services, air cargo stations, in-flight catering, laundry, information networks, and airport hotels.
We hope the economies of scale will boost the competitiveness of the CAL Group as a whole.
What difference are the A350s making to your operational economics and you network planning?
We adopted the new A350-900 in 2016. The composites that make up 70% of the aircraft fuselage improve aviation safety; the high-quality cabin environment with complete air exchange every two minutes improves passenger comfort; and the latest Rolls-Royce engines reduce fuel consumption and carbon dioxide emissions more than 25%.
We plan to resume our London service at the end of the year and we are increasing the frequency of flights on North American and Oceania routes
These developments translate into a more comfortable flying experience for travelers while also improving the fuel efficiency of the fleet.
Deliveries of the A350-900 are continuing. And as part of our new long-range market strategy, all our European routes have switched over to direct flights.
As mentioned, we also plan to resume our London service at the end of the year. At the same time, we are increasing the frequency of flights on North American and Oceania routes.
New destinations with potential are also being evaluated.
Do you still see a future in alliances or are partnerships between airlines now evolving into new forms?
As part of our network strategy, we joined SkyTeam to cooperate on network expansion with other partner airlines, including KLM, Delta Airlines, Korean Air, and China Eastern.
But we also partner with China Eastern, China Southern and Xiamen Airlines to form the Greater China Connection.
A “CI/GA/KE/VN Summit” is also in place with Korean Air, Vietnam Airlines and Garuda Indonesia.
At the same time, we have codeshare agreements with such leading airlines as Japan Airlines, Philippine Airlines, Malaysia Airlines, and Bangkok Airways. All forms of partnership therefore remain relevant.
What is the feedback on your app and what other new technologies excite you most?
China Airlines is being rejuvenated through advances in digital technology. The China Airlines app was launched in 2016 and has been downloaded more than 540,000 times to date.
The number of tickets ordered via the app each month has jumped as much as 347% while the use of e-check-ins is doubling every month.
China Airlines is implementing real-time luggage tracking, Fast Travel and other services
Many of the user reviews on Google Play and the iOS App Store have been very positive. China Airlines will continue to optimize its app services in the future.
New technologies are providing the aviation industry with more accessible services.
Artificial intelligence, Internet-of-things, augmented/virtual reality, biometrics, big data and Bluetooth tracking and positioning are all applications under development by China Airlines.
To support IATA’s application of the latest aviation technologies, China Airlines is implementing real-time luggage tracking, Fast Travel and other services.
We will work with IATA in the future to create completely new experiences for travelers through innovations in technology.
China Airlines signed the Buckingham Palace declaration against wildlife trafficking. How vital is environmental work to airline sustainability?
China Airlines spares no effort when it comes to participating in international environmental sustainability initiatives.
As a professional air freight service provider, China Airlines introduced a blanket ban on the transportation of shark fin on 1 December 2014.
In-flight meals, food in VIP lounges and the Group’s catering services will no longer feature endangered species either.
China Airlines has environmental protection as a core element of corporate risk management
In June 2017, Chairman Nuan-Hsuan Ho signed the Buckingham Palace Declaration Against Wildlife Trafficking.
And China Airlines will continue to partner with governments, customs, airlines and other units to prevent the illegal trade in wild animals and plants, implement the UN’s Sustainable Development Goals, and promote the eco-diversity of the planet.
Recognizing the growing impact of the aviation industry on the environment, China Airlines has environmental protection as a core element of corporate risk management.
The efforts and initiatives made by China Airlines in sustainability management have led to our inclusion in the Dow Jones Sustainability Indices and DJSI Emerging Markets. Our environmental management report received the highest score for its category.
In 2016, we were also ranked as a global industry leader by the International Carbon Disclosure Project.
Do you have confidence in the continued growth of Asia-Pacific air travel and what challenges do you see ahead for the region?
Demand in the passenger market is growing steadily due to the gradual recovery of our economy with double-digit growth in the last two years.
IATA’s 2017 forecasts indicate Asia-Pacific will be the fastest-growing region and should continue to maintain double-digit growth in terms of demand.
Many conventional operators have rushed to enter the LCC market, leading to the vibrant growth of the Asia-Pacific aviation market
The outlook is therefore positive. LCCs will be the main challenge.
The increasing liberalization of aviation, the LCC business model, and the geography of Asia-Pacific have led to the rapid development of LCCs.
Many conventional operators have rushed to enter the LCC market, leading to the vibrant growth of the Asia-Pacific aviation market. But this has led to more intense competition so overall profit growth has slowed.
What is your vision of the future?
The pace of global development in all sectors of the economy has led to many social, economic, and environmental issues, such as the use of child labor, gender and racial discrimination, water pollution, and the greenhouse effect.
I believe if all airlines can work together, pool their resources, integrate different parts of the supply chain, and think about the social, economic and environmental value the aviation industry can generate, we will build an aviation environment for sustainable development.