Longjiang Wu, CEO, China Express Airlines, says those airlines that make it through the COVID-19 pandemic can look ahead to a brighter future
How did the airline respond to the challenges of COVID-19 and what were the lessons learned?
During the epidemic, China Express had the fewest cancellations in China and was also the fastest to recover its operation. In some places, China Express is the only airline service. So, if we stopped operations, local air transportation will be totally disrupted.
Who’s going to transport any medical care personnel and supplies to the destination in a rapid fashion? This is the reason why we kept many routes operating. The local people need us, and we proved our unique value during the virus outbreak.
Of course, the spread of COVID-19 caused operational pressure, but we never lacked courage or wisdom. There were many examples of positive advice by staff and the management team made quick decisions, especially on cutting expenditure.
To counter the drop in load factor, we changed the aircraft on most operating routes from A320s to CRJ-900s, effectively reducing cost. In addition to cutting these core expenses, we cooperated with upstream and downstream partners to reduce or suspend payable costs.
Before passengers board, we disinfect the aircraft, take the temperature of passengers and require them to show their health QR codes. During the flight, we prepare necessary items such as masks and hand sanitizers for passengers. The rear of the aircraft has reserved seats as isolation areas. After the flight, if there are any passengers with a fever, we will promptly send the passenger to the hospital.
And to recover the “lost month,” the company launched a “racing champion” activity to encourage all departments to do their best in their daily work.
We have even launched an upgrade service so that customers can “lock” the surrounding seats to meet their health needs. Some routes have a special discounted price too, so that consumers are more willing to choose air travel.
Business operations are often challenged by external uncertainties. The challenge may be a virus outbreak or something else. It is inevitable that something will happen again to challenge the industry. Taking decisive action and being flexible management are the greatest lessons we learned.
What effect has COVID-19 had on your finances and on the Chinese airline industry at large?
The COVID-19 outbreak affected the income from tickets sales, which brought enormous cash flow pressure to the whole aviation industry. But our strategy averted the worse effects of this outbreak.
China's epidemic has been effectively controlled, and the air transport industry is gradually recovering. The situation in foreign countries is still relatively serious. But because China Express Airlines mainly flies domestic routes, it is less affected by the global spread of the virus.
I strongly believe that the tourism demand suppressed by the epidemic will be released, especially domestically. In fact, the demand for business travel and private flight has only been delayed. It never disappeared. The airlines which survived the cold winter will enjoy a beautiful spring.
However, being consistent with our long-term strategy does not mean that we will give up flexibility in day-to-day business. For example, we quickly launched a couple of charter flights emphasizing health and safety, work resumption, and poverty alleviation to meet customer needs.
Is flexibility important going forward or should an airline maintain focus on longer-term strategy?
The Chinese pay attention to finding the right direction and persevering in their work. Since its establishment, China Express airlines has been focusing on cultivating the regional market, which remains the long-term strategy of the airline.But being flexible is something we will focus on going forward. It will help us to remain effective should unexpected conditions occur. The increased proportion of cargo is an example of the flexibility the aviation industry needs.
There is a saying that the only thing that doesn’t change is change. Innovation is an essential part of China Express’s corporate culture. This epidemic has inspired all airlines, including us, and we believe that aviation will become more adaptable to unforeseen changes in the future.
Finding a balance between strategic determination and operational flexibility is crucial. These strategies are not mutually exclusive. In fact, both are very important.
China Express has always focused on the regional market and promoting transport between urban and rural areas. We keep in mind our mission to create value for our clients at all times.
But being consistent with a long-term strategy does not mean giving up flexibility in day-to-day business.
How is the day-to-day business progressing?
China Express Airlines is the only airline that focuses on the regional market in China. We have regional routes connecting 82 of our total 116 destinations. We also cooperate with our industry peers.
We have been expanding our regional business on two fronts. On the one hand, we cooperate with trunk airlines to build up an extensive network that effectively connects hubs. But we also access a deeper layer and wider coverage by stretching to short-haul general aviation business.
Working on both fronts enables us to deliver more connecting flights to expedite travelling time. In that way we create exceptional value for our clients.
Improving ourselves as a network airline is an important part of China Express’s strategy. It meets the national interest, industry trends, and the immediate needs of people. We will continue to uphold our unique value and assist communities through better air services. In turn, this drives economic development and social progress.
How important is the drop in the price of oil?
It is very important. As we all know, the cost of fuel is the main cost of airlines, accounting for about 30%. This proportion will fluctuate as the price changes. Therefore, the drop in oil prices is of great benefit to all airlines and can significantly reduce airline costs.
It will benefit our clients too. The government encourages a link between ticket and oil prices. Falling oil prices mean that ticket prices have more room to float, and clients have the opportunity to enjoy a lower-priced flight, which makes air travel more competitive and helps economic recovery at this particular time.
China Express Airlines attaches great importance to fuel saving, which is not only related to the cost control of the company but also to environmental protection. Lower fuel consumption means less carbon emissions.
Our strategy consists of four measures. First is choosing an aircraft that has a better fuel economy performance; second is maximizing the aerodynamics; third is optimizing the parking position and the route; fourth is optimizing the speed of the aircraft.
Can aviation maintain its focus on social and environmental responsibility given the financial hardship facing the global industry?
China Express has always concentrated on corporate social responsibility (CSR). For example, we fund Shuangshi Village Primary School in Qianjiang district.
After the outbreak of COVID-19, our company donated a large number of masks to many small cities in Guizhou province, the Inner Mongolia Autonomous Region, and Chongqing. And we delivered anti-epidemic materials for free even when the company was facing revenue pressure.
As for carbon emissions, in addition to the above we pay attention to the disposal of waste to avoid environmental pollution.
But we also work with Fauna & Flora International, participating in such public welfare projects such as the protection of Huagaimu (an endangered tree) in Wenshan and protecting migratory birds in the Sanjiangyuan region.
There is an old saying in China: “No act of kindness, no matter how small, is ever wasted.” Despite COVID-19, we keep doing what we can. We hope that the entire aviation industry will contribute to environmental protection and other public welfare and undertake more social responsibilities in the future.
What other challenges and opportunities do you see for your airline and the global industry going forward?
Of course, the biggest challenge is the epidemic. But challenges and opportunities coexist. We should not put ourselves in a merely defensive position, but also assess the possibility of turning this crisis into opportunities. It provides a chance to re-prioritize our business, improve our service, and transform our company and the whole industry.
In a broad sense, China‘s regional air transportation market still has huge potential. According to the data, there are still one billion people who have never travelled by air. Most of the potential customers are in small and medium-sized cities or rural areas, which means there is still a huge market that has never been explored.
In the United States, there are nearly 19,000 basic airports. In China, there are only 202.
And we must emphasize the benefits of aviation, including jobs and economic development in so many areas.
After the epidemic, we think people will re-focus on health, which means high-quality agricultural products will be more in favor. We can take advantage and bring local high-quality agricultural products to the whole country quickly.
Are you expecting demand to bounce back quickly or will the virus affect how people view air travel in the future?
We are optimistic. After SARS in 2003, we saw a rebound in household consumption. We estimate that when the epidemic has passed, the previously suppressed travel demand will be released and the aviation industry will enter a strong recovery period.
People will pay more attention to their health though. Being in a closed environment may make people worry. But if you need to travel, flying is the best option. The shorter the journey time, the lower the probability of being infected during the journey. And air quality in the cabin is comparable to an operating room in a hospital. It is a controlled environment, which will be a positive selling point.
So, though the outbreak of COVID-19 is a bad thing for the aviation industry in a short term, in the future it may make more and more people prefer air travel for their journeys.
What does IATA membership mean for your airline?
China Express is very thankful for IATA’s strong support. We joined in 2017 and we have gained insight into international standards in safety, service, and technical capabilities. In line with China’s Belt and Road strategy, China Express will continue to expand communication and cooperation with our overseas partners, learn and apply new technologies, new thought, and new business models. This is important as we look to expand our international business to serve our customers and partners.
And we are very willing to share the experience and wisdom from China Express and China civil aviation with the world too.