Liu Shaoyong, Chairman of China Eastern Airlines, tells Graham Newton that partnerships are more important than ever.
What lessons have you learned from the pandemic?
Airlines and industry partners around the world have encountered an unprecedentedly severe challenge. It is not easy to survive, but recovery has become a common expectation.
At the same time, aviation is an important channel for population flow and exchange and is an important battlefield for the prevention and control of the pandemic. Together with global partners, we shoulder the responsibility, protect lives, build a strong line of defense, and pass on hope.
Since the outbreak of the pandemic, none of the nearly 100 million passengers we have carried has tested positive due to infection in the cabin.
Another important point is that the strategic role of the industry has become more prominent in the pandemic. China Eastern Airlines carried the first charter flight with medical personnel and supplies in China, and the first anti-pandemic charter flight provided by China to aid other countries. We undertook more than one-third of the pandemic prevention and transportation tasks of China's civil aviation. We flew in total 1,482 charter flights for pandemic prevention, 28,978 regular flights for materials, 76,292 tons of pandemic prevention materials, and 22,929 medical personnel.
We also took the lead in launching customized charter flights and passenger-to-cargo measures to ensure the smooth flow of the global industrial supply chain, effectively serving the global anti-pandemic cause.
If you ask what we have learned from the pandemic, I think there are several points. First, the Chinese government insists on the “people first and life first” principle, taking pandemic prevention and control as the top priority. We did a good job in passenger protection and strengthened employee protection.
There were so many touching stories, including the outstanding performance of the younger generation. Truly gratifying!
Second, we cherish the friendship of our partners even more. At the beginning of the outbreak of the COVID-19 in China, many SkyTeam member airlines extended helping hands to China Eastern Airlines and shipped pandemic prevention materials to China immediately.
After the virus spread in the world, China Eastern Airlines soon donated anti-pandemic materials to SkyTeam partners to actively assist them in preventing and fighting the pandemic. The friendship and mutual assistance between partners are even more precious. We feel that global airlines and industry chain partners are like a big family. We support each other and work hand in hand.
Third, we did not press the pause button for reforms under the pandemic, and we improved our resilience against risks and sped up market recovery through reforms. Last year, we initiated the "Fly on Weekend" products with a fixed total price for unlimited times of travel.
Major airlines actively followed up and stimulated demand through product innovation to bring the aviation industry chain to life.
In 2020, China Eastern Airlines posted a loss of RMB-6.533 billion, the least among the world's large aviation groups. The total asset was RMB377.418 billion, ranked first in the industry in China, and the net asset was RMB114.56 billion, ranked first in the industry globally.
What is your current situation regarding domestic and international traffic?
At present, the domestic civil aviation market in China is recovering well, and overall traffic has exceeded the pre-pandemic level.
Taking the June 2021 data as an example, China Eastern Airlines’ domestic flights increased 38.6% year-on-year, and domestic passenger traffic increased 53.8%.
The international market, subject to the global pandemic and pandemic prevention requirements, is still implementing the "five one policy" of the Civil Aviation Administration of China; one flight on one route by one airline to one country in one week.
Although China Eastern Airlines’ international passenger flights are only one fortieth of the same period in 2019, we promptly adjusted our capacity structure, shifting international passenger capacity to the cargo market and domestic passenger market.
How important has cargo been to your revenues during the coronavirus crisis?
In 2020, we performed 5,383 freighter flights with a cargo volume of 433,000 tons, among which 3,459 flights were the transportation of emergency materials of 43,000 tons. There were 6,601 flights of converted freighters with a total of 102,000 tons.
We established the largest converted freighter fleet in China's civil aviation system, covering 26 major hubs around the world. And our domestic aviation logistics network "integrates sky and earth" with Shanghai as the main hub and 11 cargo stations in Beijing, Kunming, Xi'an, Wuhan and others as sub-hubs.
In June of this year, Eastern Air Logistics, a subsidiary of China Eastern Air Holding Company Limited, was listed on China’s A-share market, becoming the first stock of Chinese aviation logistics in the mixed ownership reform. Eastern Air Logistics has won recognition from a large number of new customers with 80% of them direct customers.
We also opened the first regular fresh food flight from China to the Western Hemisphere. And we opened two international cargo routes, Shenzhen-Amsterdam and Shenzhen-Jakarta.
Finally, we continue to increase our frequency of flights to Europe and America, as well as to Asia-Pacific, building a brand for fresh products and a world-class air cargo transportation network.
Is the SkyTeam Alliance still important or is each carrier concentrating on individual challenges during the crisis?
As a member of SkyTeam Alliance, China Eastern Airlines has been actively cooperating in all aspects. The airline is not only an active participant and beneficiary of international exchanges and cooperation, but also a contributor to the development of international civil aviation.
To achieve international development and build a world-class aviation group, China Eastern Airlines needs to work together with the alliance and get assistance from partners. At the same time, China Eastern Airlines’ development will contribute to the development of SkyTeam and the global civil aviation industry. Especially, when serving as the Chairman of SkyTeam Executive Board, China Eastern Airlines actively participates in the collaboration, decision-making, and operation of the alliance.
Faced with the challenges of the pandemic, airline alliances will play an irreplaceable role. For example, SkyTeam and member airlines have formulated the SkyCare&Protect alliance pandemic prevention standards, which have played an important role in the restoration of passenger confidence.
At present, airline alliances should help airlines to better unite and cooperate, actively explore, and gradually resolve various travel risks and policy restrictions through industry standards and technical means, restoring the overall confidence of travelers and the entire industry as soon as possible.
Looking at the post-pandemic era, changes in travel habits, the application of new technologies, and the fulfillment of global responsibilities such as carbon emission reduction will all bring profound changes to the aviation industry. No airline is immune from difficulties or can weather everything on its own.
Facing the future, airline alliances and IATA will have a broader space to give play to their own advantages, and then seek new development models based on the existing traditional cooperation formats to create a higher level of value return for airlines.
In the future, China Eastern Airlines will continue to work closely with SkyTeam member airlines and other major international carriers to cope with the changes and provide consumers with better international air travel services.
Is environmental responsibility a major part of your future strategy?
The international community has long formed a general consensus on environmental protection. Today's environmental issues are just like development issues, which are major global challenges.
China Eastern Airlines always adheres to the concept of green development and promotes sustainability. From 2016 to 2020, China Eastern Airlines saved more than 600,000 tons of fuel and reduced carbon emissions by about 2 million tons. In 2019, the fuel efficiency of its passenger aircraft fleet increased 4.5% compared with 2015. In the ESG (Environmental, Social, and Corporate Governance) 2020 rating of MSCI, China Eastern Airlines ranks first with four other airlines including Delta Air Lines and Singapore Airlines, and was the only A-grade among the six Chinese A-share airlines.
At the "Two Sessions" (NPC and CPPCC, the National People's Congress and the Chinese People's Political Consultative Conference) this year, I put forward a proposal on "Developing a plan for Chinese civil aviation industry to achieve carbon peaks in 2030 and carbon neutrality by 2060".
In the proposal, I put forward countermeasures and suggestions in six aspects, including: strive to improve the operational efficiency of the fleet; coordinate the carbon market mechanism; establish a carbon emission trading management platform for the aviation industry; boost the construction of the carbon market in Chinese civil aviation; and promote the formulation of supporting laws and regulations for the green development of the aviation.
China Eastern Airlines will also take the initiative to promote the green recovery of the industry.
What are your priorities in terms of new technologies?
The first is big data technology. As early as 2017, I emphasized that the most valuable asset for China Eastern Airlines is not the aircraft, but the big data in our hands. Therefore, we established a Research and Development center to further explore and activate big data.
The second priority is training and teaching projects. For example, recently, we cooperated with the civil aviation authority to promote an airport technology research project. It develops a new low-cost, cross-time, and cross-regional flight training model that can replace the existing airport theoretical training methods.
The third priority is independent intellectual property technology. The first-generation projection system we independently researched and developed has been put into use on simulators. The system is superior to the original system in terms of picture quality and response delay. The "4D cockpit diagram" developed by us successfully obtained a software copyright at the National Copyright Center. This App has four modules: Cockpit Familiarity, Flight Management System Skills, Learning Materials and Standard Operating Procedure Assistant, realizing the original intention of "carrying the cockpit anytime" in teaching. This is a first in the industry.
In general, what are the main challenges and opportunities ahead for Chinese carriers?
The pandemic continues to spread across the world and has had a profound impact on passengers’ travel concepts, methods, and willingness. Passengers’ panic and emotions have deferred and amplified effects in the market, and Chinese airlines are still facing tremendous pressure to survive. The pandemic has caused a relatively weak international market and excessive growth in domestic supply in China. This is driving extremely fierce competition in the domestic aviation market.
But, as the world's second largest economy, China has a natural demand for air passenger and cargo transportation. There are still more than 1 billion people in China who have not travelled by air. It also has the world's largest middle-income group. China's civil aviation market has huge potential and broad prospects for development.
Furthermore, China has entered into a new stage of development, and is deepening supply-side structural reforms, as well as building a new development pattern, providing a good market environment and policy support for civil aviation in China.
We also have confidence in the rapid recovery of the global aviation industry. The increase in vaccination rates will effectively boost public travel and promote the speed up of civil aviation recovery.
Do you think the industry will struggle to attract new talent or is aviation still an attractive industry?
China Eastern Airlines has always regarded outstanding talent as the cornerstone for improving the core competitiveness of the company.
In the context of the pandemic, China Eastern Airlines has not encountered difficulties in recruiting. The selection of pilots and the recruitment of ground service staff are relatively smooth, and the China Eastern Airlines brand is popular among colleges and universities.
The brand strength and digital transformation of China Eastern Airlines have good development prospects, attracting a large number of middle and senior IT personnel, especially in cloud transformation, information security, mobile development, agile transformation, data analysis, new technology application, and other positions.
We are committed to being a caring airline, not only for passengers but also for our employees. We provide free tickets for new staff, implement Project Excellent for fresh graduates, and roll out salary incentives to outstanding college graduates at the beginning of their career. This further enhances the image of China Eastern Airlines as a high-quality employer and attracts more talent to join us. At the same time, we are also trying our best to provide reliable employment security for global employees.
How should the industry prepare for the customer of the future? What changes do airlines need to make to the entire travel experience, from booking through to the destination?
Digitization has become the engine of sustainable industrial growth. China Eastern Airlines unswervingly promotes digital transformation and is committed to building a digital and intelligent airline.
China Eastern Airlines has launched a “5G+AI”-based smart travel service solution, built a digital travel platform for passengers, provided cloud services based on smart customer service, created a brand-new smart customer service system, and enabled robot smart services in 26 business scenarios.
And we have launched the “First-sight Flight Attendant” service model at core hub airports. The whole process of check-in, luggage checking, and boarding can be realized with only “one face” (no physical material needed). The check-in is controlled within 20 minutes, and the waiting time is greatly shortened.
In our VIP Lounge at Beijing Daxing Airport, ground service personnel used 5G technology combined with AR glasses to intelligently identify and silently search for passengers, bidding farewell to the traditional mode of urging passengers to board by broadcasting.