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Air China Ltd ( , , ) ( , Pinyin: , literally meaning "China International Airlines", abbreviated ) is the People's Republic of Chinamarker's state-owned and second-largest commercial airline after China Southern Airlines. It is the flag carrier and the only airline in the world 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 the 18th largest airline in the world by fleet size. Air China is also the world's largest carrier by market capitalisation. It has its headquarters in Shunyi Districtmarker, Beijing.

Air China's main hubs are Beijing Capital International Airportmarker, Chengdu Shuangliu International Airportmarker and Shanghai Pudong International Airportmarker, with other focus cities at Hangzhou Xiaoshan International Airportmarker, Chongqing Jiangbei International Airportmarker, Tianjin Binhai International Airportmarker and Hohhot Baita International Airportmarker. 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 18th 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 Lufthansamarker, 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 (CN¥1.2 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 Kongmarker 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 Chinamarker. 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 Yorkmarker 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 Londonmarker from Hong Kongmarker 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 December 15, 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 August 17th 2009, a joint announcement revealed a new shareholding structure in which Air China acquire a 29.99% stake in Cathay Pacific, while the latter will own 18.09% of the former.

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



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 throughout Asia to the Middle East, Western Europe, and North America. The majority of the routes operate from its Beijing hub.

It currently operates a significant number of Asian, Australian and European destinations from Shanghai Pudong International Airportmarker. This will also extend to North America when it adds an additional San Franciscomarker service, complementing its service from Beijing and complementing United Airlines codeshares on the route. It also has some international routes operating and connecting from Chengdu Shuangliu International Airportmarker, Chongqing Jiangbei International Airportmarker, Dalian Zhoushuizi International Airportmarker, Dubai International Airportmarker, Hangzhou Xiaoshan International Airportmarker, Kunming Wujiaba International Airportmarker, Madrid Barajas Airportmarker, Nanning Wuxu International Airportmarker and Xiamen Gaoqi International Airportmarker.

Air China is upgrading these routes to larger aircraft from 2008/2009, Beijing-Delhi to A340 from 767-300ER, Beijing-Dubai to A330-200 from 767-200ER, Beijing-Chengdu-Karachi to 757 from A319 with new routing replacing Urumqi stopover and Beijing-Stockholm to A330-200 from 767-200ER.

On December 10, 2006, it made its first flight to São Paulomarker (via Madridmarker), which became its first South American destination. This was the airline's longest direct flight. The service began with the Boeing 767-300 aircraft but because of its popularity, the service has been upgraded to A330-200. Air China suspended service to São Paulo in September 2008, the airline planned to resume flights on June 28, 2009 but those plans have been shelved. Air China will resume service São Paulo beginning December 20, 2009.

Routes to Australia, Frankfurtmarker, Madridmarker currently operated by Airbus A330-200 may be replaced by Boeing 787 Dreamliners. The Boeing 787 Dreamliners will be used on flights to Torontomarker and Washington, D.C.marker 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, hoping that Air China will build up a good brand image and become a premier choice for passengers flying from Europe to China.

Cargo and passenger service expansion plans

Air China is looking at the United States for international cargo and passenger service expansion. A June 17, 2008 St. Louis Beacon reported that Air China planned to establish a cargo hub at Lambert St. Louis International Airportmarker. The United States Department of Commercemarker allowed expansion of the foreign trade zone near Lambert airport on February 13, 2009.

Fleet

Passenger

As of June 2009, Air China fleet includes the following aircraft:
Air China Fleet
Aircraft Total Orders Options Passengers
(First/Business/Economy)
Notes
Airbus A319-100 33 0 0 128 (8/120)
Airbus A320-200 5 22 0 158 (8/150)
Airbus A321-200 12 15 0 185 (16/169)
Airbus A330-200 20 0 0 283 (12/271)
251 (36/215)
Airbus A330-300 0 20 0 282 (36/246)
Airbus A340-300 6 0 0 255 (8/28/219)
Boeing 737-300 15 0 0 128 (8/120) To be replaced by Boeing 737-800.
Boeing 737-700 20 0 0 128 (8/120) Winglets to be installed by end of 2009.
Boeing 737-800 52 68 0 167 (8/159) Winglets to be installed by end of 2009.
Boeing 747-400 4 0 0 344 (10/42/292) Features new first and business class.
Boeing 747-400M(combi) 6 0 0 280 (10/24/246) Being retrofitted to feature new first and business class.
Boeing 757-200 13 0 0 200 (8/192)
Boeing 767-300 4 0 0 227 (10/26/189)
Boeing 767-300ER 5 0 0 230 (30/200)
Boeing 777-200 10 0 0 345 (49/296)
314 (12/49/253)
Boeing 777-300ER 0 15 0 ??? (??/??/???) Will be delivered in a three-class configuration
featuring new first and business class and 34’ pitch economy seats
Boeing 787-8 0 15 0 ??? (0/??/???)
TOTAL 211 155 0


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. Airbus had previously stated that Air China were to be customers for the A380. Air China has no immediate plans to add the Airbus A380 to their fleet, citing that only one type of jumbo jet is currently needed in their fleet. However, Air China has not ruled out the future purchase of the A380.
  • Airbus, in 2008, for the purchase of 20 Airbus A330 aircraft, scheduled to be delivered from 2011–2014. This will expand capacity by up to 16.5% and replace aging Boeing 767 equipment.
  • Boeing, on July 16, 2008, purchased a total of 45 Boeing aircraft comprising of 15 Boeing 777-300ERs and 30 Boeing 737-800s, scheduled for delivery from 2011–2015 and allowing for a capacity expansion of 35%. [38031]


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. [38032]
  • Airbus, on November 14, 2008, for the purchase of 20 Trent 700 powered Airbus A330-300 aircraft.
  • Boeing, On November 14, 2008, for the purchase of an additional 30 Boeing 737-800 and 15 777-300ER aircraft. [38033]


Previously operated

Passenger fleet



Cargo fleet



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 Airportmarker, 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. At the same time as the move at Beijing Capital International Airport, all Star Alliance members moved to the new Terminal 2 at Shanghai Pudong International Airportmarker to maintain simple transfers with Air China, Shanghai Airlines and other Star Alliance airline members.

Air China has codeshare agreements with the following airlines:





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. The route was suspended in September 2008.


Phoenix Miles



Phoenix Miles ( ) is the frequent flyer program of Air China. This is the first frequent flyer program launched in China. It was designed to reward frequent flyers traveling internationally and domestically with Air China and its partner airlines.

Members earn mileages for travel on Air China, its affiliated partner airlines and partner airlines. The companion card may be upgraded to VIP status. There are special redemption rates for VIP members Gold card members and Platinum card Members.

  • Silver card members (Star Alliance Silver): earn 25% mileage bonus on eligible flights.
  • Gold card members (Star Alliance Gold): earn 25% mileage bonus on eligible flights.
  • Platinum card members (Star Alliance Gold): earn 50% mileage bonus on eligible flights.


Partners

In addition to Star Alliance members and its subsidiary Shandong Airlines, Air China has frequent flyer partnerships with the following airlines:

Like many other frequent flyer programs, redeemable mileages can be also earned through other partners, for example, hotels, financial institutions, credits, car rentals, etc.

Incidents and accidents





Board of Directors

  • Kong, Dong (chairman and non-executive director)
  • Wang, YinXiang (vice chairman and non-executive director)
  • Wang, ShiXiang (vice chairman and non-executive director)
  • Cao, Jianxiong (non-executive director)
  • Pratt, Christopher (non-executive director)
  • Chen, Philip Nan Lok (non-executive director)
  • Cai, Jianjiang (executive director and president)
  • Fan, Cheng (executive director and vice president)
  • Hu, Hung Lick (independent non-executive director)
  • Zhang, Ke (independent non-executive director)
  • Jia, Kang (independent non-executive director)
  • Fu, Yang (independent non-executive director)


See also



References

  1. " UPDATE 2-Air China sees uncertain skies ahead as Q2 soars." Reuters. Wednesday August 26, 2009. Retrieved on October 3, 2009.
  2. " Air China." Pacific Asia Travel Association. Retrieved on October 3, 2009.
  3. Introduction of Air China
  4. " Air China 2006 profits get a boost on strong passenger numbers." Channel News Asia. March 20, 2007. Retrieved on June 10, 2009.
  5. "Air China Launches New Service, Works on Image," USA Today, October 9, 1991, p. 8B.
  6. Bangsberg, P.T., "Lufthansa, China Plan More Funds for Aircraft Maintenance Venture," Journal of Commerce, June 24, 1992, p. 2B.
  7. Vandyk, Anthony, "Air China: New Name, New Heights," Air Transport World, February 1991, p. 54.
  8. Flynn, Ann Amelia, "China's Airlines Take Wing," China Business Review (Washington), May/June 1993, p. 14.
  9. "Air China to Stand Alone," Airfinance Journal, March 1995, p. 8.
  10. Harding, James, "Air China Plans Overseas Float," Financial Times (London), October 15, 1997.
  11. Lo, Joseph, "Star Alliance Beckons Air China," South China Morning Post, Bus. Sec., May 24, 2001, p. 2.
  12. Chang, Leslie, "China Intends to Merge 10 Airlines Into Three," Wall Street Journal, July 24, 2000, p. A21.
  13. "CAAC Blocks China Southern Merger with Air China," AFX-Asia, September 28, 2000.
  14. Ng, Eric, "Air China Set to Announce Lead Bank for Listing," South China Morning Post, Bus. Sec., July 16, 2001, p. 4.
  15. Holland, Tom, "China Break-In," Far Eastern Economic Review, October 25, 2001, p. 41.
  16. " Air China Limited (Hong Kong Stock)." Reuters. Retrieved on June 10, 2009.
  17. " "GATEWAY TO THE EAST" ST. LOUIS SEEKS TO BE CHINA'S FREIGHT AND COMMERCIAL HUB." St. Louis Commerce Magazine. June 2008. Retrieved on June 10, 2009.
  18. " Commission looks to bring Chinese air freight to St. Louis." St. Louis Business Journal. January 19, 2009. Retrieved on June 10, 2009.
  19. Binns, Evan. " Lambert foreign trade zone expanded." St. Louis Business Journal. February 16, 2009. Retrieved on June 10, 2009.
  20. [1]
  21. [2]
  22. Air China fleet age
  23. http://www.airchina.com.cn/en/about_us/airline_partners/airline_partners.shtml
  24. http://br.fly-airchina.com/en/saoflight.html
  25. "Phoenix Miles Main Page (English)" about us
  26. http://ffp.airchina.com.cn/lcljz/ljgz.jsp
  27. Photo: Air China, Boeing 767-2J6/ER, Beijing Capital (PEK / ZBAA), China, July 1, 2007, B-2553 (cn 23744/155) Nose landing gear was accidentally retracted during boarding at gate 209. Two people were injured on board.The plane was badly damaged and with a highly responsiable attutide towards its passengers,Air China didn't repair it but retired it.


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