flying high - myCARGO Airlines

Transcripción

Flying high
The evolution of China’s economy and
commercial flying
The Economist recently described China as “the world’s most dynamic economy”
and all eyes are on the country as it continues to raise its international profile.
Hainan Airlines represents the new and exciting face of corporate China. In its first
two decades, it has achieved excellence in its operations and the stage is now set for
the company to realise its potential as a global brand.
I offer my warmest congratulations to Chairman Chen Ming and President Liu Lu,
and to everyone at Hainan Airlines, on the company’s 20th birthday.
Andrew Rashbass
Chief Executive
The Economist Group
As one of China’s most cutting-edge airlines, Hainan
Airlines has been built on the philosophy of providing
quality services for the global traveler, and delivering an
exceptional level of customer care and attention. In the
20 years we have been operating, we have been ranked
for three consecutive years by Skytrax as a five-star
airline (2011-13), and received accolades as “China’s
best airline” as voted by the readers of internationallyrenowned business travel magazines Global Traveler
and Premier Traveler.
Since its inception in 1993, Hainan Airlines has experienced two decades of
continuous safe operation –over more than 360 million hours of flight time. In
January 2013, Hainan Airlines named “safest airline of the year”by the German
flight safety organization Jet Airliner Crash Data Evaluation Centre (JACDEC) .
Through 20 years of entrepreneurship, we have built a flight network from our
home base of China extending to five continents – because of the support of our
customers along the way. On 500 routes from China to 90 cities across Asia,
Europe, North America and Africa, we will continue to stay true to our core
concepts of putting the customer first, and offering the best of Oriental hospitality.
As China becomes increasingly integrated into the global economy, so too will
Hainan Airlines expand its global coverage.
From the day of our first flight from our home base in Hainan, we have striven
to meet and surpass the expectations of our passengers—to whom we are very
grateful for the continuous support and confidence.
In 2013—and in the next 20 years to come—it is the goal of continuing to offer a
world-class flying experience to you that will continue to drive us forward.
Liu Lu
President
Hainan Airlines Co. Ltd
20 years of flying high
GDP, China (% real change pa)
Source: Economist Intelligence Unit
16%
14%
Hainan Airlines founded.
Standardised joint-stock
restructuring (January).
Asian financial crisis
Acquired its first Boeing
737 aircraft (April 13).
Maiden flight from Haikou
to Beijing (May 2).
B-shares traded on the
Shanghai Stock Exchange,
the first of a domestic aviation
player (June).
12%
10%
97
93
03
A shares admitted
to the Shanghai Stock
Exchange (October).
China connects
to the Internet
8%
10th
anniversary.
94
99
6%
China joins
the WTO
Issued foreign shares,
becoming the first Sinointernational joint venture
in the Chinese aviation
sector. 4%
First international route
from Sanya, Hainan
to Seoul, South Korea
opened (October 01).
95
01
2%
0%
1993
2
1994
1995
Hainan Airlines 20th Year Anniversary
1996
1997
1998
1999
2000
2001
2002
2003
Average monthly wages in China, US$
US$800
The first intercontinental
route of “BeijingBudapest” was operated
jointly by Hainan Airlines
and Malév Hungarian
Airlines (August 2).
US$700
China becomes
the world’s second-largest
economy
Officially launched
“Brightness Action” in
Qinghai province (July 4)
supporting the provision
of sight-restoring
cataract surgery to the
underprivileged. Extended
to provinces including
Tibet, Sichuan, Inner
Mongolia, Xinjian, Gansu,
where 3,000 patients have
been treated. 20th Anniversary.
09
13
US$500
“Brightness Action”
programme extended to
Africa. Sight-restoring
cataract surgery provided to
612 patients in Malawi and
Zimbabwe (November).
10
04
US$400
Recieved SkyTRAX
Five-Star Airline award,
becoming the first airline
from the mainland
(January 10).
More than 800 cataract
patients got treated in
the year of 2011 with
the Brightness Action
in Zimbabwe and
Mozambique.
Global
economic
crisis
08
US$600
US$300
US$200
11
US$100
US$0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
3
Engines of growth
Engines of
growth
China’s economic miracle and Hainan Airlines
In 1993, China’s course to become the world’s
biggest economy passed a number of milestones.
The National People’s Congress had just approved
the Three Gorges Dam project; the biggest
McDonald’s restaurant in the world had recently
opened its doors in Beijing; and the nation was on
a one-year countdown to connect to the Internet. It
also marked the maiden voyage of Hainan Airline’s
first commercial flight, a Boeing 737 aircraft, which
departed from Haikou for Beijing on the 2nd of May.
China FDI and share of world exports
250
• Foreign Direct Investment (bil USD)
• Share of world goods exports (%)
200
15
*
*
*
* 12
150
9
100
6
50
3
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
*Economist Intelligence Unit estimates
COMPARATIVE GDP FIGURES: 1993-2012
16000 • France • Germany • Japan
• US • China
12800
9600
*
6400
3200
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Nominal GDP, US$ billions
4
What followed over the next two decades in China
was an economic miracle that elevated the nation,
its aviation industry, and ultimately Hainan Airlines
to unprecedented heights. The twin drivers of
globalisation and rising income levels in the country
facilitated an explosion in domestic and international
air travel that is indicative of the continuing growth
in China’s middle class. While the World Bank
reported that just 31 million passengers travelled on
Chinese airlines in 1993, by 2010 that number had
soared nearly nine-fold to 268 million. Embracing
the opportunities of this economic awakening in
China, Hainan Airlines grew significantly over its first
20 years of service, expanding from its main hub in
Haikou, Hainan Province, to now serve 500 domestic
and international routes with a fleet of more than 120
aircraft.
Accelerating growth sets the course
for change
When Hainan Airlines launched in 1993, China’s
economic miracle was warming up its engines but yet
to take flight. Despite a population of over 1.1 billion
people, the nation’s economy was still a lackluster ninth
biggest in the world at that time, the average wage
was around US$49 per month, and China contributed
just 2.5% to global goods exports. But the climate
was changing quickly. Deng Xiaoping’s market-based
economic reforms were into their fifteenth year and
China had consolidated its agricultural economy as a
result. The manufacturing and services sectors had
been undergoing similar transformation since the
1980s, and when Jiang Zemin stepped into the role
of the nation’s President in 1993, he carried Deng’s
“Socialism with Chinese Characteristics” to a fullblown socialist market economy. Changes in policy
towards foreign investment saw a growth in capital
inflows that increased rapidly in the 1990s as investors
flocked to benefit from China’s economic upsurge,
which led to a blossoming of China’s export sector.
As the best features of centralised planning were
blended with the flexibility and dynamism of marketbased policies, GDP growth took off on the back of
China’s newly burgeoning enterprise sector. The
economy was partially opened up to entrepreneurs,
particularly in newly created Special Economic Zones
(SEZs).
Hainan Airlines takes off in an economic
hot-spot
Driven by this new dynamic in the Chinese
economy, Hainan Airlines developed in a distinctly
entrepreneurial fashion too, developing a new, more
diversified ownership structure and attracting private
capital in a manner that encouraged dynamism and
Hainan SEZ economic growth: 1996-2011
40000 • GDP per capita (US$) • Nominal wages per capita (CNY)
• Total exports - US$ millions • Utilised FDI - US$ millions
32000
24000
16000
8000
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11*
innovation. According to Hainan Airlines Company
Limited chairman Chen Ming, this more nimble
organisation enabled the company to capitalise on
new flows of business and leisure travellers, and
respond to the emerging market opportunity driven by
economic growth and restructuring in China, and its
ongoing integration into the global economy.
To this end, China set up its SEZs with the idea of
attracting foreign direct investment (FDI), increasing
its export capabilities, and facilitating the proliferation
of technology transfer. These were to operate as
limited areas of market-based liberalism within the
wider Chinese economy, with greater independence
and flexibility to engage in global markets. Four
SEZs were initially established in 1980 in the cities of
Shenzhen, Zhuhai, Shantou and Xiamen.
When the island of Hainan was established as China’s
5
Engines of growth
China’s five
special economic
zones
Shanghai
HUBEI
SICHUAN
ZHEJIANG
JIANGXI
HUNAN
GUIZHOU
FUJIAN
Xiamen
GUANGDONG
GUANGXI
Zhuhai
• Special economic zone
Hainan
Shantou
Shenzhen
Hong Kong
30th province in 1988, it took the title as China’s
largest SEZ and the first to occupy an entire province.
The subsequent economic transformation in Hainan
has been about as remarkable as it gets. Between
1996 and 2011 the Economist Intelligence Unit (EIU)
estimates indicate an increase in utilised FDI of 93%,
in exports of 460%, in nominal wages of 561%, and
in GDP per capita of 571%. Additionally, the rural
population, which outnumbered the urban population
by more than 2 to 1 in 1996, is now estimated to have
been overtaken by city dwellers.
Five years after Hainan Province was established
Hainan Airlines was born, embarking on a speedy
growth trajectory that mimicked its environment.
Bringing something strategically new to the Chinese
aviation sector, the airline quickly embraced China’s
“east meets west” mentality, combining the warmth
of traditional Chinese hospitality with advanced
Western technology and management techniques.
Prioritising personal service and attentiveness to its
travellers’ individual needs, Hainan Airlines’ ethos
of “oriental hospitality” pervades all aspects of the
flight experience. Western expertise has also been
6
incorporated into Hainan Airlines’ stringent safety
programmes, and it ranks among the world’s safest
airlines, having received a zero non-conformance
rating in a recent IATA Operational Safety Audit. From
the very beginning, safety has been of utmost priority
for the company’s leadership, who are constantly
seeking new ways to improve safety performance, and
encourage staff to take a proactive attitude towards
identifying and reporting potential safety issues so
that action can be taken to mitigate risks.
Safe in the storm
Continuing its economic miracle, the lessons
learned from its SEZs, including the rapid success
of Hainan Airlines, led China to expose more
of its regions to investment, competition and
globalisation. This outward-facing focus saw the
country open up many border and coastal cities,
Urbanisation in China: 1993-2012
inland provincial capital cities, free-trade zones,
technological development zones and hi-tech
industrial zones. High levels of capital investment,
from FDI and a high domestic savings rate,
contributed to a sharp increase in productivity.
Urbanisation also played a major role, as workers
freed up by a more efficient agricultural sector
were able to shift to higher value-added roles in
the manufacturing sector. McKinsey and Company
reports that in 2012 China had more than a hundred
cities of a million or more people – by 2030 its urban
population is expected to exceed a billion people.
Towards the end of the 1990s China’s economy
shifted even further towards competitive free
markets with consolidation of the state-owned
sector. By 1997, a plan was in place to sell, merge,
or close a large number of SOEs to drive efficiency.
Share of GDP by sector: 1993-2012
50
65
40
52
30
20
*
• Urban population (%)
39
26
*
• Agriculture • Industry • Services
10
13
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09* 10* 11* 12*
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11* 12*
7
Engines of growth
China’s growing middle class
Passenger Cars per 1000 people
0.9
53.4
TV Sets per 1000 people
209
722
Telephone Connections per 1000 people
12
184
Personal Computers per 1000 people
1.2
1993
273
2012*
The most definitive evidence of China’s embrace of
globalization and free markets came with its 2001
ascension to WTO membership and accompanying
regulations concerning government subsidies and
market access.
investment and consumption, thereby staving off any
major slowdown. Ironically, while twenty years earlier
it was Western ideals and FDI contributing to China’s
economic advancement, it was now the West looking
to China to drive their own growth.
Much of China’s success can be ascribed to the
extraordinary growth of its manufacturing sector,
known as the “pillar industry” of its national economy.
A fundamental shift in the structure of the nation’s
economy saw it surpass both Japan and the USA
in manufacturing production and foment its role
as a global economic powerhouse. Over the past
two decades, this transformation has seen the
agricultural sector’s share of GDP drop from 19.7% in
1993 to just 10.1% in 2012, while over the same time
period the industrial sector’s share increased from
48.6% to an estimated 63.0%.
A global giant in full flight
As the first decade of the new millennium drew to
a close, the success of China’s transformation was
evident for all to see. The change from the early
1990s, both in terms of gross national statistics and
the living standards of individual Chinese, was stark.
In 2012 China’s economy had grown to be second
only to the United States, who it is widely expected to
surpass by 2030. According to the EIU, the average
monthly wage was US$625, and China accounted
for more than 11% of global goods exports—firmly
establishing its position as the world’s largest
exporter. No longer seen as a mere source of cheap
manufacturing labour, China now has a middle
class numbering in the hundreds-of-millions. Their
economy is diverse, rapidly industrialising, and
produces a large proportion of the world’s high-value
and hi-tech products.
The robustness of China’s new economy was
especially evident in the late 2010s, when the world
was forced to confront the global economic slowdown
emanating from developed economies in the West.
Though China’s GDP growth rate dipped briefly from
a high of 14.2% in 2007 to 9.2% in 2009, by 2010 it
was back up to 10.4%. The country’s strong financial
position had freed the government to implement
a large-scale stimulus package to boost domestic
8
It was within this wider context of Chinese economic
success that Hainan Airlines flourished to become
one of the fastest-growing Chinese airlines. Utilising
American and European aircraft, technology, and
management techniques, Hainan Airlines grew briskly
in the domestic and regional markets during its first
decade of operation, establishing bases in Beijing,
Xi’an, Taiyuan, Urumqi, Guangzhou, Lanzhou, Dalian
and Shenzhen, in addition to its main hub in Haikou.
In keeping with China’s increasing focus on forging
advantageous connections with the outside world,
Hainan Airlines opened its first intercontinental route
between Beijing and Budapest in 2004. The airline
now boasts destinations as far afield as Toronto,
Brussels and Berlin.
While part of this growth can be aligned with
the airline’s geographical position within one of
the world’s most dynamic economies, it’s also a
function of Hainan Airline’s steadfast commitment
to excellence in all aspects of performance, and its
capacity to attract China’s best and brightest talent.
“We have greater autonomy to develop a unique
corporate structure and management systems,”
says the chairman Chen Ming. “This has encouraged
employees to be more proactive, and fosters an
innovative culture.” This modern corporate identity
has been a driver in the development of Hainan
Airlines as one of China’s most dynamic companies,
and a truly global player. In recognition of the high
standards required for it to thrive in a pressurised
global market, the airline’s leadership ensures its
achievements surpass every other Chinese airline,
and Hainan Airlines was named “Best Airline in
China” for three times, according to British aviation
research firm Skytrax’s annual passenger survey –
rivaling the world’s best.
Quality-driven initiatives such as regular audits
from Skytrax that measure 600 different elements
of service quality to monitor, assess and improve the
travel experience, have seen Hainan Airlines achieve
Skytrax’s coveted 5-star status in 2011 and 2012 – one
of only six airlines to do so in the world. Additionally,
its management’s world-class approach to safety has
seen Hainan Airlines beat the competition to establish
an outstanding safety record and a ranking in the
world’s top-five airlines, according to German aviation
magazine Aero International.
As China has embraced globalisation to climb
the international stage, so has Hainan Airlines
in its rapid ascent as a global leader in aviation.
Encompassing its advanced technology, inflight
experience, passenger safety and corporate
sustainability, Hainan Airline’s commitment to
international levels of excellence indicates its flight
path of success is set to continue into the next
twenty years and beyond.
9
Flight path
Flight path
The evolution of aircraft and civil aviation
It was two American brothers, Orville and Wilbur Wright,
who turned a mutual infatuation with flying into history at
the turn of the 20th century.
Hailing from Ohio, they chipped away at more than 200
kite and glider wing designs and were soon flying efficient gliders. They finally achieved the lift they required
with the world’s first successful powered aircraft – the
Wright Flyer. After a number of mechanical failures,
failed attempts and minor crashes, it was Orville who, by
stroke of luck, piloted the first recorded, controlled and
sustained heavier-than-air flight on December 17, 1903.
Reaching just 120 feet with a pedestrian speed of 6.8
miles per hour, his journey marked the humble beginning of civil air travel.
then the globe, will be linked by flight, and nations so knit
together that they will grow to be next-door neighbours…
What railways have done for nations, airways will do for
the world.”
The commercial aviation industry reached a significant
milestone in 1914 when former St. Petersburg, Florida,
mayor Abram C. Pheil became the first paying passenger on the inaugural St. Petersburg–Tampa Airboat
Line – the first scheduled airline using a winged aircraft.
Pheil bid US$400 for the right to the ride that seemed a
miracle – reducing a 12-hour train ride commute to just
23 minutes.
The golden age of aviation
Aircraft technology was still in its infancy when war
spread through Europe from 1914–1918, but its potential
for reconnaissance and intelligence fast-tracked its development. It’s the two decades between the World Wars
that are generally seen as aviation’s golden age, when
sharp improvements to aircraft technology and manufacturing occurred. Aircraft had been deployed on a massive
scale during World War I, and benefiting from the subsequent surplus, it was a modified British bomber – the
Vickers Vimy – which made the first transatlantic flight
in from the US to Ireland piloted by British flyers Alcock
and Brown in 1919. The milestones continued to fly by.
Formed in 1916, British company Aircraft Transport and
Travel kicked off the world’s first regular international
flight service between Hounslow Heath Aerodrome (London) and Le Bourget (Paris) on August 25, 1919, flying a
DH.16s designed by Geoffrey De Havilland and featuring
Rolls-Royce engines.
That same year it was Claude Graherme-White, an English aviation pioneer and in 1910 the first to make a night
flight, uttered the prophetic words: “First Europe, and
As early as 1924 came the first round-the-world flight,
departing, from Seattle, although today’s impatient
jetsetters would baulk at the 175-day round trip. In 1927
10
the world held its collective breath as the first solo nonstop flight across the Atlantic from New York to Paris
was successfully made by Charles Lindbergh in a time of
33 hours. The following year, German aircraft designer
Claudius Dornier produced the imposing Dornier Do X
– the world’s largest, heaviest and most powerful flying
boat ever created. Capable of carrying 169 people and
with a wingspan of 48 metres, advancement in aviation
paused for a breather, with nothing bigger or more
impressive flown for an incredible 20 years.
China’s entry into aviation history is aligned with arguably
the most recognised name in aircraft design and can be
traced to one man – Wang Zhu - who in 1916 joined new US
manufacturer Boeing as its first chief engineer after starting his career as a naval cadet at the age of 12. The Wangdesigned 12-passenger Boeing 80 biplane – the company’s
first plane built explicitly for passenger travel - was introduced in 1929. The US Navy snapped up 50. An upgraded
version, capable of carrying an extra six passengers, took
off later that year. Within two years Wang returned to China
to become chief secretary of the China National Aviation
Corporation. By 1920, China had successfully completed its
first commercial flight, carrying eight paying passengers
from Shanghai to Nanjing, and in 1949 its civil aviation
industry was consolidated with the creation of the General
Administration of Civil Aviation of China (since reformed as
the Civil Aviation Administration of China.)
Boeing continued its improvements to its planes, focusing on safety and comfort. The Boeing 247 launched
in 1933; the first aircraft to fly passengers across the
US without stopping overnight or requiring a change in
plane. Only capable of carrying 10 passengers, the 247
was quickly surpassed by the Douglas DC-2 (1934) and
the subsequent DC-3 (1935) which went on to become
one of the most successful aircrafts in history.
The jet stream
Despite its initial popularity, however, DC-2 was powered
by propellers, which were beginning to lose their appeal.
Despite its early success, carrying 30,000 passengers at
high speeds and altitudes in ‘vibration-free’ comfort on
long-haul flights, design problems arose. Aviators had
turned to their attentions to developing jet aircraft, and
the first to fly such a technological feat was the British
Overseas Airways Corporation (BOAC) with the Britishmade De Havilland DH106 Comet in 1952.
This opened the door for Boeing to deliver its 707 (so
called, as the marketing department decided ‘Model 700’
wasn’t catchy enough) – an aircraft that is still in limited
use today. The four-engine, 156-passenger jet was the
company’s first and dominated passenger air transport
in the 1960s. On the 707’s test flight, Boeing pilot Alvin M
Tex said, “She flew like a bird, only faster.” The achievement reaffirmed Boeing as the one to beat, with the
11
Flight path
707 influencing subsequent designs including the 727,
757, and the best-selling jet in history – the 737, which
launched in 1968.
Three decades later the all-conquering 737-800 hit the
air in 1998, and with sales of more than 4000. While the
737 is clearly Boeing’s biggest commercial success, the
most iconic (and one that captured the zeitgeist best) was
still to come.
A giant in the sky
1969 was the year of aerospace, and marked the beginning of an era of massive advancements in civil aviation.
In the wake of that unforgettable moon landing, Boeing
unveiled its prestigious Boeing 747, affectionately
12
referred to as the Jumbo Jet. First flown commercially
in 1970, the 747 changed the face of air travel with its
660-passenger capacity and ability to reach 8350 miles
at high subsonic cruise speeds of Mach 0.85. Still the
biggest legend of the sky, the four-engine 747 has only
recently been bettered in terms of capacity – a record it
held for 37 years.
Boeing kept a watchful eye on the launch of the Concorde just one month after its Jumbo. Even though the
Concorde didn’t enter regular service until 1976, the
world’s first supersonic jet airliner that invited high-paying passengers to cross the Atlantic in just 210 minutes
at top speeds of Mach 2 was undoubtedly intimidating.
In 1996, the fastest Concorde flight from London to New
York occurred in just 173 minutes. British journalist Sir
David Frost, a Concorde regular, said of the experience:
“You can be in London at 10 o’clock and New York at 10
o’clock. I have never found another way of being in two
places at once.”
The clash of kings
By the 1980s the commercial airline industry was changing rapidly with new entrants to the market, including
low-cost carriers. In 1983, Boeing waved goodbye to its
faithful three-engine 727 and welcomed a twin-engine
757, while the European consortium Airbus finally made
the impression it had been seeking with its A320. This
aircraft had more than 400 orders before it first flew,
compared with just 15 orders for Airbus’ first aircraft,
the A300, back in 1972. In 1988 it rolled out its A321, a
slightly longer version of the A320 by almost 7 metres.
Not to be outdone and sensing the rise of a new European power, Boeing quickly embarked on a series of
high-profile firsts with its trademark 747, including a
round-the-world record of 36 hours and 54 minutes in
1988. The two-horse race had officially begun; Airbus hot
on Boeing’s heels with the announcement of their A330
and A340 towards the end of the decade.
A new carrier checks in
The economic shift in power to the Middle East and Asia
in recent years is reflected in the skies, with new aviation
routes and players launching in these markets over the
past twenty years. China’s boom in airline travel and
demand for reputable, world-class carriers led to the
creation of Hainan Airlines, whose fleet climbed to 120
passenger aircraft over these vibrant two decades, a
line-up that includes the Boeing 737 and 767, the Airbus
A330 and A340. Prioritising youthful but experienced
planes with an average age of 5.7 years, the majority of
vehicles in Hainan Airlines’ hangars are Boeing 737-800s
(it currently has nearly 100) – still the world’s most popular airline lineage. From its very inception, the airline has
recognised the importance of investing in its fleet. “With
regards to aviation, technology is critical to safety,” says
Wang Ying-ming, chairman of the HNA Aviation Holding
Company Limited. The investment in hardware has been
matched with Hainan Airlines commitment to developing
its human capital – starting with a 30-strong crew back
in 1993, the fleet is now serviced by more than 10,000
staff today.
While Hainan Airlines was ascending to become the
fourth-largest airline in China, Boeing finally reasserted
13
Flight path
International tourism in China
150 Millions
120
90
60
30
• Arrivals • Departures
93
94
95
96
97
98
99
00
01
02
03
04
05
06
Source: Economist Intelligent Unit estimate, World Development Indicators, World Tourism Organisation
its perceived lead in the global market with the launch
of their 777 in 1995. Designed in conjunction with eight
major airlines, and to plug the capacity gap between
the 767 and 747, it became the world’s largest twin-jet
aircraft with a capacity of up to 550 passengers – a far cry
from its 12-passenger biplane back in 1929.
China’s air travel boom
Air passenger numbers have soared globally over the
past 20 years, with more growth on the horizon, especially in China. The International Air Transport Association
(IATA) predicts growth of 5.3% passengers per annum
in 2012-16, with 500 million domestic and 331 million
new international travellers, and a combined total of 3.6
billion air passengers by 2016, up 800 million from 2011.
One in four of these additional passengers will be from
China, with 159 million of them domestic passengers and
34 million international. Driven by the incredible rise of
14
07
08
09
10
11
12
13
14
15
16
17
China, the IATA estimates that the Asia-Pacific region will
account for a third of global passengers by 2016 – making it the largest regional air transport market (ahead of
both Europe and North America, with 21% each).
This growth has naturally led to the development of larger
aircraft to meet future demand, with Airbus and Boeing
remaining head-to-head in their heavy-weight tussle for
supremacy In 2005 Airbus recaptured the lead with its
launch of the world’s largest passenger airliner, the Airbus
A380, capable of carrying up to 853 passengers.
Boeing was quick to respond to the praise poured on
the A380 with its 787 Dreamliner – a greener, more
fuel-efficient aircraft than any other (20% better than
the outgoing 767) that drew attention during a time of
escalating fuel prices and emissions concerns. Delivery
delays pushed back its highly-anticipated debut, but
the Dreamliner finally entered service in 2011, with its
maiden flight tellingly taking place between Tokyo and
Hong Kong.
A new landscape on the horizon
Boeing and Airbus continue to clash crowns as kings of
the sky, but with the Chinese market alone expected to
require 4000 new aircraft by 2030, the entry of a new contender may be imminent. In 2011 the Chinese government
pledged US$237 billion towards developing its aerospace
industry. That same year, the government-owned Aviation
Industry Corporation of China purchased US smallpropeller airplane manufacturer Cirrus Industries for
US$210 million.
While China is yet to make any real waves in terms of
aviation technology, its carriers, such as Hainan Airlines,
have reached world-class levels in terms of safety,
comfort, reliability, and reach. Already flying regularly
to such places as the UAE, Thailand, Germany, Russia,
Singapore, Switzerland and the US, Hainan Airlines was
the first Chinese carrier to fly to the Pacific northwest of
America, setting forth for Seattle in 2008, and has plans
to further expand its five-star flying experience.
On both its domestic and international routes, the company has focussed on building partnerships to ensure
the most seamless of experiences in terms of aircraft
servicing and maintenance. Liu Lu, President of Hainan
Airlines Company Ltd outlines the company’s strategy
to deepen their domestic and international network, and
ensure that the airline remains among the best in the
business when it comes to technology upkeep and safety.
“We develop domestic partnerships to enable the maintenance and protection of our fleet across China,” he says.
“To this end, we also focus on enhancing our capacity to
manage airports, such as Sanya Airport in Hainan. This
improves our ability to support our fleet.” To further this
objective, the group has also established an independent
maintenance company with regional branch offices in
Beijing, Taiyuan, Xi’an, Guangzhou, Shenzhen, Urumqi, as
well as the home base of Hainan, alongside 27 maintenance bases throughout China. On its international routes,
Hainan Airlines has established maintenance and support
centres in the Americas and Europe, totalling 100 sites.
As China continues its emergence towards becoming the
world’s most powerful economy, advancements in its civil
aviation industry will emblematise its transformation.
When global markets collapsed in 2009, Boeing executives spotlighted China as a leader of the global aviation
recovery effort, calling the nation, “the world’s most dynamic market for commercial airplanes.” Just as Claude
Graherme-White predicted that air travel would one day
unite the world, China will be one of those at the controls.
15
ABOVE AND BEYOND
ABOVE AND BEYOND
The flying experience
When civil aviation was still in its infancy, safe
transport across the skies was all a passenger
could ask for. And while safety has stayed atop every
jetsetter’s priority list, air tourists have become a
great deal more demanding these days, with many
prepared to pay more for superior service. With
open skies policies spreading in influence over the
past two decades, growing competition has sent
airlines striving to put their passenger experience
offerings ahead of the rest.
A five-star winner
While many airlines can boast a pleasant user
experience, only a small handful can officially claim
they provide a five-star service – one of which is
Hainan Airlines. The civil aviation industry’s five-star
rating is managed by the sector’s leading research
organisation, Skytrax. Formed in the UK in 1993, the
same year that Hainan Airlines launched, Skytrax
issues respected benchmark reviews of airlines and
airports across the globe. As well as conducting
audits and research, the organisation carries out
comprehensive traveller surveys that evaluate
all elements of air travel – from the cabin crew’s
performance to on-board catering.
In January 2011 Skytrax granted Hainan Airlines the
coveted five-star rating. Having already achieved
16
four stars just 13 months prior, the airline’s
ascent to the top of the list was swift. At the
Paris Air Show in June of that same year, Skytrax
also awarded Hainan Airlines two accolades
in its annual World Airline Awards: Best China
Airline and China Airline Staff Service Excellence.
Winners were selected following Skytrax’s
extensive 10-month global survey of more than
200 airlines and nearly 19 million passengers
from over 100 countries. Skytrax president Edward
Plaisted presented the titles to Hainan Airlines
president Chen Ming, recognising the airline’s
growth, dedication to high standards of service,
and uniquely Asian characteristics. This was
the first of consecutives years in which Hainan
Airlines had scooped the awards, garnering the
same distinctions again in 2012.
This is a clear differentiating factor for Hainan
Airlines, and an area of strength that the
company’s leadership is justifiably proud of.
“From the feedback we receive from external
agencies or travelers, we know that a clear
competitive advantage lies in the quality of our
staff—the sincere service of our personnel and
their passion to the customer experience is our
biggest comparative advantage,” says Hainan
Airlines Company Limited chairman, Chen Ming.
17
ABOVE AND BEYOND
Finding a seat
When Hainan Airlines made its inaugural flight from
Haikou to Beijing in May 1993, no airline on the
planet had its own website. It is Alaska Airlines who
claims to have developed the first airline website
just one year later, sparking new opportunities
that were quickly pursued by British Midland
(BMI), who sold the first air travel ticket over the
Internet just one year later. Airlines snapped up
this economical way of selling seats, and now some
e-savvy carriers such as Ryanair claim to sell 98%
of their tickets online. Airline websites have also
had huge effects on how passengers source flight
information and make purchasing decisions, and
are now closely tied in with social media platforms.
For Hainan Airlines, this is an area of focus in
terms of the company’s continuing commitment to
customer service, says the chairman Chen Ming.
“The application of new technologies to enhance
our suite of sales services, ground services and
air service is important to us. We have recently
launched some innovative programs with respect
to customer booking such as advance booking for
meals, paid for reservation services, amongst other
new features.”
Lounging at the airport
The earliest forms of civil aircraft would take
18
off and land from nothing more than a grassy
field. These days, several airports still jockey for
position as ‘the world’s oldest airport’, all dating
back to the dawn of civil aviation itself in the early
1900s. Commercial airports didn’t really begin
to become cosmopolitan until after World War
II, and several more decades would pass before
they morphed into the commercial metropolises
collectively frequented by millions today. With
airlines forever in competition over the profitable
business and executive class passengers, many
airline lounges have evolved into luxurious centres
that rival boutique hotels, attracting customers
with gourmet cuisine, fine wines, free massages
and spa treatments, business suites, day beds,
and bathrooms with showers. In Beijing, Haikou,
Urumqi and Guangzhou, amongst other hubs,
Hainan Airlines has developed specialized VIP
rooms, combining the best in modern executive
hospitality with Chinese characteristics. As an
example of the attention to detail, the airline has
developed a bespoke guava cucumber scent for
their business and first class lounges in Beijing and
Haikou.
Up in the air
This pampering on the ground is rapidly undone if
an aircraft can’t meet the same expectations in the
sky. Business class compartments are designed
to reward and retain the highest-paying category
of customer; many providing seats that flatten
into beds, premium food and wine, large personal
entertainment screens, free Wi-Fi, and improved
privacy. Cutthroat competition has also compelled
airlines to invest in pleasing even the lowest-paying
customer, with sharp improvements in recent years
to cuisine and entertainment in economy class.
Hainan Airlines has always scored positively with its
passengers, and with Skytrax, when it comes to its
in-cabin service.
While women make up the majority of flight
attendants, the world’s first air stewards were
actually male. The very first female flight
attendant didn’t check in until 1935, when
25-year-old nurse Ellen Church accepted the
job with United Airlines. Hainan Airline’s cabin
crew has scored some of the highest marks with
Skytrax, the regulator praising their efficiency,
friendliness, helpfulness, and enthusiasm. More
striking is the testament of customers, who have
spoken highly of the cabin crew’s willingness to
go beyond the call of duty in serving passengers.
“In boarding a flight from Shenzhen to Chongqing,
I noticed that every Hainan Airlines attendant had
a warm smile, and was enthusiastic in helping us
to place our hand baggage, turning on the reading
lights and taking care of passengers and children.”
In addition to a positive and helpful attitude, the
importance of clear and precise communication
is emphasized onboard, as described by Wang
Ying-ming, chairman of the HNA Aviation Holding
Company Ltd.
“The inflight broadcasting is purposefully left to
the pilot,” he explains. “After all, the captain is in
charge and knows the detail, and will be able to
communicate more precisely what is happening.
He truly cares about the passenger. Of utmost
importance is communicating details at the right
time in making announcements to passengers so
that they can manage their time and understand
what to expect, elaborates the chairman.
“Openness with passengers and prioritisation of
the onboard communication skills of our pilots and
crew is critical.”
An entertaining ride
One would hope that those aboard the first roundthe-world flight in 1924 that took a spine-tingling 175
days brought a real page-turner with them. While
aircraft have mercifully sped up remarkably since
then, carriers have had to work hard to keep twitchy
passengers entertained.
19
ABOVE AND BEYOND
Inflight entertainment presumably began with
little more than a crossword puzzle. Then, in 1936,
the ill-fated Hindenburg airship took things up
a notch with their piano, lounge area, bar, and
smoking room during its two-and-a-half day trek
across the Atlantic. Movies hit the skies on an
occasional basis after World War II via projector
machines, becoming regular fixtures via shared
analogue screens from 1961, and personal audio
devices playing music were first installed in
the 1980s. Personal, on-demand entertainment
libraries as we know them today were pioneered
as far back as 1988 by Airvision. The company
produced an audio and video on-demand (AVOD)
system for Northwest Airlines that included a
2.7-inch LCD seat-back screen. The reaction from
passenger trials on the airline’s Boeing 747s was
overwhelming.
Once the preserve of first and business class
customers, they’re now commonly enjoyed in
economy class cabins. Most used today were
installed as upgrades to existing aircraft, with the
cost reaching up to US$5 million per plane. However,
manufacturers such as Airbus are including ondemand entertainment and internet capabilities
in new aircraft designs – from the A320 right up
to the A380. Not just for enjoyment, these devices
20
also deliver important information to passengers,
such as native-language safety instructions and
connecting flight data – all designed to better the
experience. With globetrotters now able to connect
to free Wi-Fi in their hotels, coffee shops and
shopping malls, it was only a matter of time before
an internet connection was demanded in the air.
With this in mind, In February 2013, Hainan Airlines
was the first domestic airline in China to pilot inflight Wi-Fi allowing passengers to be connected to
the internet.
Satisfied customers
Hainan Airlines’ ability to attract a five-star ranking
from Skytrax is partially owed to its ‘Customer
First’ strategy, which encompasses both product
and service qualities – key factors in Skytrax’s
determination of five-star airlines. Again, passenger
feedback is the strongest testimony of the staff’s
commitment to offer the highest level of customer
care. A retired teacher living in Shanghai recently
flew with the airline to Berlin to visit her daughter.
Having booked a round-trip, she was unexpectedly
delayed by the onset of a typhoon. “A customer
care representative called me four times to
follow up and ensure that I was well looked after.
When all flights were cancelled, he helped me to
arrange an alternative flight and called me again
wish me a safe journey,” she recounts. “I was
extremely grateful, as was my daughter who was
understandably anxious of her elderly mother. I was
very moved by the quality of customer service and
professionalism of the operational staff.
low. “What a pleasant surprise,” he said. “Excellent
food, new, clean and comfortable cabin and seats,
efficient and courteous staff at check-in and onboard. Overall excellent and I wasn’t surprised
when I discovered the five-star rating.”
The collective experiences of Hainan Airlines
customers, as noted by Skytrax during their
customer surveys, best illustrate where those
five stars have been earned. One passenger
who missed his connection was refused a
discount voucher for a hotel. Instead, Hainan
Airlines provided a free hotel, meals, and ground
transport to the stranded traveller.
Full speed ahead
As the flying experience travels into the future,
airlines are having to find fresh ways to keep
fidgety passengers enthralled. With seat-back
screens set to stay, advancements will likely come
in the form of live event coverage, high definition,
3D, and even hologram technology. Programmes
will likely be streamed to passengers’ own devices
via Wi-Fi, and on-board social networking could
allow customers to choose their seat based on
people’s profiles. For Hainan Airlines, there is
no time to rest as the company continues to
innovate and enhance its service offerings through
innovation and early adoption. “Going forward, we
will combine to ensure the best of in-flight service
with the application of new technology to enhance
the customer experience”, says Chen Ming. “Mobile
applications, the integration of social networking
and micro-blogging to enhance customer care
inflight and on-the-ground; and the development of
a truly seamless travel experience through cloud
computing are on the cards.”
Another passenger depicted how staff had
reacted to an unfortunate incident in which a
flight attendant had accidentally spilled red wine
over him just after take-off. “She was mortified,”
he said. “I changed into a slumber suit and my
jeans and shirt were returned to me 30 minutes
before landing, pressed and folded, without a hint
of wine stains. Simply excellent service.”
Finally, another passenger was pleasantly
surprised during his first experience with the
airline. As the flight had been the best value he
could find, his consequent expectations were
21
SAFE SKIES
SAFE SKIES
The advancement of technology and safety
Since the dawn of flight, steady progress in
technology, design, production, and stringent IATA
standards, have produced ever safer aircraft. The
first fatal aviation accident occurred in 1908, when
one of the Wright brothers (Orville) demonstrated
the Wright Flyer to the US Army Signal Corps
division with Lieutenant Thomas Selfridge as
his passenger. When the plane’s right propeller
snapped mid-flight, Wright was injured and
Selfridge was killed, becoming the first person to
die in a powered aircraft.
In its 20 years of service, Hainan Airlines has
recorded no serious injuries or fatalities, reflecting
just how far airline safety has travelled since the
industry’s its inception. Despite its endurance as
one of the world’s favourite phobias, flying is still
the safest form of transport by passenger-distance
calculation. Out of 74 airlines studied by OAG
Aviation in conjunction with the PlaneCrashInfo.
com accident database, a human’s chance of
being killed in an aeroplane accident is 1 in
4.7 million.
If you are travelling on one of the world’s safest
carriers, your chance drops to 1 in 19.8 million.
And air travel is becoming even safer as the years
roll on, with fewer accidents recorded while the
22
number of travellers accelerates. The six-point
safety programme implemented by the International
Air Transport Association (IATA), which incorporates
data management and analysis, safety management
systems, flying operations, maintenance operations,
infrastructure safety, and safety auditing, has
contributed to accidents falling by 77% overall over
the last decade. And 2012 recorded zero fatalities on
all of IATA’s 240 member airlines – one of which is
Hainan Airlines.
From its first commercial flight in 1993, Hainan
Airlines has made safety its primary priority – from
its best-practice staff training to the maintenance
and expansion of its modern fleet. The emphasis
on safety percolates throughout the organisation.
“Safety is the foundation,” says Wang Ying-ming,
chairman of the HNA Aviation Holding Company Ltd.
“We spend a lot of time thinking about, studying
and developing practices on how we can manage
and control the risks, drawing lessons from other
industries.”
Superior airliners and skilled pilots
In 1937 the first pilot checklist was introduced
after a prototype B-17 crashed in Ohio, killing the
two pilots who forgot to disengage a critical wing
adjustment mechanism prior to take-off. These
days, the comprehensive checks aimed at curtailing
poor aeronautical decision-making by pilots are
starting to be handled on tablet devices.
Applying human factors to aviation safety
improvement progressed around World War II.
The advancement of radio technology that led to
the usage of radar during World War II also had
marked effects on commercial aviation navigation.
This technology has since surrendered to the
superior satellite-based Global Positioning System
(GPS), which can now pinpoint the exact location of
airborne aircraft, both vertically and horizontally.
When the arrival of computer technology
revolutionised the world, the commercial aviation
industry reaped the benefits, with significant
enhancements to both safety technology and pilot
training. In 1981 the first computerised flight
simulator further reduced the threat of pilot
error, which remains the highest cause of aircraft
accidents involving fatalities.
Aircraft have since become so technically advanced
that multiple computer systems can now fly
planes with improved efficiency and accuracy.
The popular Airbus A320 was the first to feature
a fully-digital fly-by-wire (FBW) control system
from 1987, which replaces manual flight controls
with automatic technology. Airbus and Boeing
have differing policies regarding FBW. Airbus
relies on its computerised system to retain flight
control; however, there is a mechanical back-up
system installed in all its models, with the A380
incorporating electronic back-up systems for all its
in-flight controls. Boeing’s 777, the first commercial
airliner to be 100% computer-designed, allows
its pilots to completely override the computerized
system during emergencies.
Playing it safe
For the aviation sector in particular, there are three
fundamental pillars in which Hainan Airlines has
invested significantly in order to stay ahead of the
pack. Utilising the latest in aviation technology;
ensuring capital investment in both equipment
and people; and most importantly, in developing a
culture of safety, from which Hainan Airlines draws
on lessons learnt by its peers. “Other fast-growing
airlines had serious accidents for many years,”
says Mr Wang. “They brought senior-level expertise
from outside to modify that culture with great
success. For us, it is about accountability, openness
and learning.”
Developing a culture of integrity and maintaining
23
SAFE SKIES
5
6
8
0’Hare International Airport, US
66,633,503
Los Angeles International
Airport, US
63,688,121
Dallas-Fort Worth
International Airport, US
58,591,842
3
7
London Heathrow Airport, UK
70,037,417
Paris Charles De
Gaulle Airport, France
61,611,934
1 95,462,867
Hartfield-Jackson Atlanta
International Airport, US
Top 10 Busiest
Airports by Passengers 2012
(according to ACI)
systems that audit and measure safety
performance is at the centre of the airline’s safety
philosophy. To this end, Hainan Airlines was the
first airline in China to adopt internationally
recognised safety management systems (SMS). In
the IATA Operational Safety Audit (IOSA) conducted
in July 2011, Hainan Airlines successfully
completed its review with zero non-conformance.
The IOSA assesses the operational management
and control systems of an airline and is a condition
of IATA membership.
A safe flight
Some well-recognised in-flight safety mechanisms
have persevered over the years, such as cabin crews
demonstrating emergency landing procedures and
the use of safety cards in seat pockets. However,
other practices have mercifully been left in the dust.
In 1993, the year that Hainan Airlines launched,
smoking was still allowed on almost all airlines – an
unthinkable practice today due to its fire risk and
discomfort to confined passengers.
With all possible measures taken to reduce hazards,
both mechanical and human, it’s little wonder
airliners in the sky have evolved to become one of
the safest places on earth. However, one critical
factor beyond any pilot’s control is the weather. Early
24
aircraft had to try to avoid foul weather or simply
risk flying through it. The onset of pressurised
compartments, pioneered as early as 1921 but not
flown in a commercial aircraft until 1938, allowed
passengers to fly above the storm clouds.
Research by Boeing has found that airliners are
struck by lightning on average twice a year, but they
are built to withstand such strikes. However, positive
lightning, which is far more powerful than its more
common negative counterpart, remains a risk to
aircraft and led to a further change in standards
in 2006. Flying high above weather systems also
reduces flight times as the atmosphere is thinner,
but it also means aircraft face a different foe – ice.
Modern airliners cleverly reroute hot air from the
engines through to leading edges of the wings, or
may have small, inflatable rubber ‘boots’ to dislodge
any build-up of ice. Boeing’s 787 Dreamliner has an
advanced electro-thermal ice protection scheme
utilising heating blankets.
Another natural peril faced by aircraft is the
possibility of a bird strike, which can have
devastating effects if a bird is ingested into the
engine or breaks the cockpit windshield. Some
airports have employed countermeasures, such
as broadcasting recordings of predators, planting
2
10
Beijing Capital International
Airport, China
81,929,359
4
Dubai International
Airport, UAE
Tokyo International Airport, Japan
66,795,178
57,684,550
9
Soekarno-Hatta International Airport, Indonesia
57,772,762
poisonous grass, or manipulating the environment
to discourage bird activity, such as the installation
of long grass.
Protecting future skies
London’s Croydon Airport was the first in the
world to introduce Air Traffic Control (ATC) in
1921. Nowadays, all major airports have ATC
towers that direct and orchestrate the take off and
arrival of flights, as well coordinating aircraft and
vehicles on the ground. Controllers have longused radar systems to manage airborne traffic;
however, some still record flight data on strips
of paper for manual systemisation. Computer
technology now allows for automatic sequencing,
as well as the ability to schedule traffic hours
ahead, but while billions of dollars have been
spent by the US Federal Aviation Administration
on the development of air control software, a
fully automated system that functions without
controllers is yet to be achieved.
According to the Airports Council International,
the world’s busiest airport is Hartsfield-Jackson
Atlanta International Airport, which in a single year
(2010) handled more than 950,000 take offs and
landing, which is more than 100 every single hour.
The busiest outside of the United States is Beijing
International Airport in China, with more than half a
million take offs and landings per year.
With further exponential growth in commercial
aviation predicted, especially in markets like
China, the role of policing the skies for safe
passage remains a pivotal part of aviation safety.
“The responsibility of ensuring the safety of our
passengers onboard is so important,” says Mr
Wang Ying-ming. “We must base our work on this
responsibility, for which no excuse is acceptable.”
As the industry continues to be challenged by
economic uncertainty, increasing fuel costs,
and environmental pressures, investment in the
critical area of safety will need to weather the
storms ahead.
The challenges for both the Chinese aviation
industry and its players in this period are
substantial. “It is very difficult to get people to
follow the rules,” says Mr Wang. “To facilitate this,
you need to have systems of measurement, and
you need to find ways of identifying and correcting
issues before they become problems.” For the
chairman, it is about ensuring proactive, systematic
risk management, including a way of garnering
feedback from the bottom to the very top of the
organisation.
25
SAFE SKIES
“We have developed a well-utilised employee
voluntary reporting system, where we guarantee
responsiveness and confidentiality for staff,” he
says. Through this mechanism, Hainan Airlines
is able to pick up on potential issues—however
small—that may have implications for passenger
safety at the ground level. In 2013 Hainan Airlines
was declared one of the ten safest airlines in the
world by the German-based Jet Airliner Crash
Data Evaluation Centre, who analyse serious
civil aviation incidents in relation to miles
travelled. It was the only Chinese carrier to make
the top ten.
Already the recipient of an international top-ten
placement for airline safety, a Skytrax Five-Star
rating, and several Golden Eagle Cups (China’s most
prestigious award for airline safety), Hainan Airlines
will continue make safety its primary responsibility
in the years to come, ensuring that its passengers
continue to feel at ease when taking to the skies
under its wing.
26
FOOTPRINTS IN THE SKY
FOOTPRINTS
IN THE SKY
The green effort and responsible flying
While civil aviation is cruising at an impressive
speed in terms of technology, safety and comfort,
turbulence still surrounds its environmental
impacts. The air transport industry’s total
contribution to manmade climate change is
difficult to quantify. The world’s leading body
for the assessment of climate change, the
Intergovernmental Panel on Climate Change (IPCC),
estimates that commercial aviation is responsible
for around 3.5% of CO2 emissions, with that figure
set to rise. The industry itself claims a slightly
lower amount of 3%; other experts believe it’s much
higher. In the European Union alone, commercial
aviation–related greenhouse gas emissions shot up
by 87% between 1990 and 2006, and it’s considered
the fastest-growing source of greenhouse gases
entering the atmosphere. However, according to the
International Air Transport Association (IATA), civil
aviation has reduced its fuel use and CO2 emissions
per passenger kilometre by well over 70% since
the 1960s.
As passenger numbers continue to soar worldwide
the civil aviation industry has employed a number
of initiatives to reduce its carbon footprint. In 2011
IATA announced targets to improve fuel efficiency
by 1.5% for each year up to 2020, achieve carbonneutral growth from 2020, and cut net emissions
in half by 2050 compared with 2005 levels. The
organisation claims sustainable biofuel technology
is critical to meeting those targets and has the
potential to reduce aviation’s CO2 emissions by
up to 80%. However, the potential of “biojet” fuel
remains stonewalled by commercial and political
roadblocks. Pushing ahead, IATA believes a 3 to 6%
share of sustainable second-generation biojet fuel
is achievable by 2020.
Putting some of the onus back on to the passenger,
the air transport industry is also pursuing voluntary
carbon offsetting as a way for airline commuters to
“neutralize” their proportion of an aircraft’s carbon
emissions by investing in carbon reduction projects.
The commercial aviation industry is expected to reach
3.6 billion passengers globally by 2016, with nearly
1 in 4 of those hailing from China. According to Chen
Ming, chairman of Hainan Airlines Company Limited,
environmental issues are of critical importance not
only for the aviation sector in the next two decades,
but for China at large. A significant reduction in
the sector’s CO2 emissions will require strong
engagement with that nation’s carriers, including
Hainan Airlines, who has already employed emissions
reductions targets to complement its environmental
and social responsibility practices. “ Hainan Airlines
27
will continue to optimise the fleet structure to
improve fuel efficiency; with an eye towards energy
conservation, and the wider objective of driving a
culture of green civil aviation in China,” he says.
A greener, cleaner China
While China’s rapid rise to prosperity over the past
two decades has lifted millions of its citizens from
poverty, it has also hatched enormous environmental
challenges in terms of air pollution, energy use, and
exhaustion of resources.
Three of the seven “priority industries” outlined in
China’s 12th Five-Year Plan (2011–2015) focus on
environmental initiatives and sustainable growth,
including alternative energy sources such as nuclear,
wind, and solar power; energy conservation and
environmental protection, including energy reduction
targets; and clean energy vehicles.
As a result, some industry experts anticipate China
may push the use of non-fossil fuels to 15% of its total
energy use by 2020. Its key non-economic targets
include increasing non-fossil fuel use to 11.4%,
reduction of energy use per unit of GDP by 16%,
reduction of CO2 emissions per unit of GDP by 17%,
increasing forest coverage by 21.66%, and decreasing
pollutants COD and sulphur dioxide by 8% each.
28
Steering air transport towards
sustainability
Servicing the air transport community for just
20 years, Hainan Airlines has moved fast in its
efforts to address climate change as well as the
environmental and social pressures faced by China.
“Carbon emissions have been a major focus of
the international response to climate change, and
Hainan Airlines has been very concerned about
environmental protection,” says Mr Chen. “Through
a set of measures driven at energy conservation,
including flight data analysis, we have saved up to
30,000 tonnes of jet fuel per year.”
Hainan Airlines has already begun introducing
energy efficiency processes across its operations,
from ground to air. In 2012 the airline order its GEnxpowered Boeing 787 Dreamliner fleet to a total of 10
aircraft. The GEnx engine offers up to 15% better fuel
efficiency, translating to 15% less CO2, and is also the
quietest engine GE produces, cutting noise pollution
by about 30%.
That same year, Hainan Airline’s energy-saving team
began close monitoring of its energy consumption
and fuel efficiency, saving 3.1 million tons of fuel in its
first year and reducing nearly 100-thousand tons of
carbon dioxide. As the first Chinese carrier to undergo
IATA Green Teams fuel efficiency analysis in 2008,
the company continues to explore various means of
improving performance in this area. “Through our
analysis of flight data, we have developed a warning
system to analyse the fuel efficiency of key routes,”
says Mr Chen. “Factors we consider and aim to
optimise fuel efficiency include flight altitude and
speed, amongst others.”
Eyes on education
Alongside its environmental objectives, another key
aim of China’s 12th Five-Year Plan is to address the
growing issue of wealth disparity in the nation. In
2012 China’s National Bureau of Statistics revealed
that its index that measures social inequality (the
Gini coefficient) stood at 0.474 after peaking at 0.491
in 2008 (0 represents perfect equality, while 1 stands
for total inequality.) China’s Five-Year Plan also set a
target of an average 13% rise in minimum wages each
year, intending for them to reach 40% of the average
salary in the nation by 2015. The plan also outlines
upgrades to social welfare, including state-supported,
Annual global aviation CO2 emmissions based
on two forecast scenarios
5000 tonnes millions
4000
3000
2000
1000
• Optimistic technology and operational improvement
• Do nothing
2006
2012
2016
2020
2025
2026
2036
2050
Source: Modelling and Databasing Task Force on behalf of the Environment Section, Air Transport Bureau, International Civil Aviation Authority
29
health care, social security and education initiatives.
Enthusiastic about increasing access to education in
China, Hainan Airlines has developed a number of
supportive campaigns. In 2000 the airline introduced
grants to talented students from impoverished areas
that qualify for higher education. It has since awarded
a grant of CNY 2000 plus 2 complimentary plane
tickets to 30 students every year so they may attend
universities across China.
In 2007 Hainan Airlines established the Hainan
Airlines Outstanding Teacher Award and the Hainan
Airlines Outstanding Scholar Award at the Civil
Aviation University of China, donating a total of CNY
380,000 in prizes to date. Committed to an inclusive
approach to education, the airline has also helped
build new schools for disadvantaged communities
throughout the country.
In good health
Amid China’s ageing population, Hainan Airlines’
parent company - the HNA Group - has become
actively involved in the pursuit of good health for all
its nation’s citizens.
In 2004 HNA Group joined forces with the Beijing
Tongren Hospital to launch the Qinghai-Tibet Plateau
30
10-Year Brightness Campaign. As a main participant,
Hainan Airlines contributed to efforts to restore vision
to cataract sufferers. Around 3000 people living with
cataracts have been successfully treated since the
campaign’s inception, which has assisted citizens
throughout Qinghai, Tibet, Sichuan, Inner Mongolia,
Xinjiang, and Gansu. In 2011 the programme was
extended to Malawi, Zimbabwe, and Mozambique to
assist 1426 local cataract sufferers.
Community spirit
In 2003 HNA Group invested CNY 20 million in the
establishment of the Benevolence Wells Project,
which helps solve water shortages in its home
province of Hainan. The campaign aims to construct
100 new water wells in key locations throughout
Hainan Island over a period of ten years. By late
2010 it had successfully integrated 71 new wells
into local drinking water and irrigation facilities,
significantly improving the living conditions of Hainan
communities and solving a drinking water shortage
for over 150,000 people.
In addition, the Group has been assisting local
government authorities with poverty relief programs
in Qiongzhong County since 1998, contributing CNY
1 billion to the region as well as providing manpower
and resources.
It has also dedicated CNY 1 billion to environmental
protection projects across China.
Disaster relief and civil unrest
With China facing its share of natural disasters in
recent decades, Hainan Airlines has been quick
to respond with the transport of people, cargo,
and relief supplies. “The development of rigorous
and detailed security programmes to tackle tough
operational issues reflects the extent to which we
take our social responsibility seriously,” says Mr
Chen. During the devastating Yushu earthquake in
2010, Hainan Airlines operated 60 special flights to
assist with the transportation of personnel and over
223 tonnes of cargo at a cost of over CNY 2.2 million.
Following the Wenchuan earthquake in Sichuan
Province in 2008, Hainan Airlines assisted with
providing evacuations, transporting the wounded,
and delivering relief supplies, accumulating around
100 flights at a cost of more than CNY 120 million.
The president is understandably proud of the
company’s record in this area. “For its contribution
to national disaster relief, our team received an
award from the State Council for its contribution to
the earthquake relief effort.”
When civil unrest erupted in Egypt in early 2011,
Hainan Airlines delivered 40 tonnes of relief supplies
to the ravaged nation, including drinking water and
food. It also transported more than 800 Chinese
citizens home who had been living or holidaying in
Egypt. When the unrest spread to Libya, the airline
stepped in to safely bring over 4000 Chinese nationals
back to China. As tensions continued throughout the
region during 2011, Hainan Airlines also collected
thousands of stranded Chinese nationals from Crete
and Tunisia, receiving honorary accolades from
the Chinese Civil Aviation Administration for its
contribution.
Flying towards a greener future
Already a global leader in service quality, technology,
and safety, Hainan Airlines will continue to spread
its wings in terms of its environmental and social
responsibility endeavours. Its achievements to date
have already seen it listed as a leading enterprise
in Hainan for reducing emissions and widely
recognised as one of China’s top green companies.
Hainan Airlines has also received honorary
accolades from the Civil Aviation Administration
of China for its work to recover stranded nationals
abroad during civil unrest in 2011. With the journey
towards carbon-neutral commercial aviation just
beginning its taxi towards take-off, Hainan Airlines
will remain a committed and active passenger in the
environmental effort.
31
FULL SPEED AHEAD
FULL SPEED AHEAD
The outlook for the civil aviation industry
Since the Wright brothers flew their Wright Flyer into
history 110 years ago, the civil aviation industry has
ascended to become an integral feature of modern
life – boosting tourism and trade, connecting cultures,
and supporting diplomatic and humanitarian efforts.
However, its progress towards profitability has been
bumpy at times. The Economist reports that the global
air transport industry ran at a net profit of just 0.1%
over the forty years prior to 2012. The 21st century’s
first decade produced only four profitable years, one of
which was its best ever (2010), which delivered a return
of just 3.2%. There are many culprits behind its volatility
across 2000–2001 including global economic instability,
rising fuel costs, pricing competition, carbon emissions
pressure, natural disasters, pandemics, and terrorism.
Nonetheless, over that same decade, productivity grew
63%, sales and distribution costs dropped 19%, and fuel
efficiency improved by 20%. And now a new generation
of technological and service innovations are gearing up
Global airlines revenue and profitability
• Revenues (US$ billions)
• Net Profit (US$ billions)
to make flying more safe, comfortable, and efficient than
Orville and Wilbur Wright could have dreamed.
China takes flight
With the Asia-Pacific region already the world’s largest
single commercial aviation market, industry leaders
are looking to China to drive up profits in the coming
decades. According to the United Nations World Tourism
Organisation, China’s spending on outbound travel
exploded to $102 billion in 2012, up 40% from 2011 to
crown them the world’s biggest tourism spender. As its
citizens’ disposable income levels continue to rise, China
is prepped to cash in on its civil aviation boom; building
45 new airports in recent years and planning another 52
by 2020.
800
20
700
10
600
0
500
-10
400
-20
03
04
*IATA Estimate
32
05
06
07
08
09
10
11
12*
Source: IATA Economics
Rising to the challenge
Passenger numbers are soaring globally, expected
to reach 16 billion in 2050; however, the civil aviation
industry is facing by a number of challenging headwinds.
Global economic turmoil in 2008 cost airlines a collective
total of $26.1 billion, according to the IATA, and wouldn’t
recover until 2011. Current economic uncertainty in the
US and the ongoing Euro Sovereign Debt Crisis continue
to threaten its balance sheet. However, the outlook for
the immediate future is relatively positive, with the IATA
recently upgrading the industry’s profits prediction for
2013 to $10.6 billion, which would make it its third most
Oil prices: 1990-2017, US$ per barrel (Brent crude)
120
100
80
60
40
20
90
91
92
93
94
95
*Economist Intelligence Unit forecast
96
97
98
99
00
01
02
03
profitable year since 2000. Asia-Pacific–based airlines are
expected to represent the greatest share of this revenue.
Commercial aviation’s fuel price headache isn’t expect
to recuperate any time soon. At over $100 a barrel in
2012, fuel currently eats into 33% of civil aviation’s
operational expenditure, meaning that even a $1.20 per
barrel increase pushes the total industry’s fuel tab up by
$1 billion. Forecasts indicate that fuel prices are likely to
drop slightly in the coming years; however, wild swings
are expected to continue.
The air transport sector has made reducing its
contribution to human-induced CO2 emissions its chief
environmental priority. In 2008 the European Union (EU)
passed legislation to impose caps on the amount of CO2
aircraft flying in to or out of Europe can emit without
penalty under its Emissions Trading Scheme (ETS) – a
measure that’s expected to save 176 million tonnes of CO2
04
05
06
07
08
09
10
11
12
13* 14* 15* 16* 17*
by 2015. The EU is now pushing for a global agreement,
which it’s currently negotiating through the ICAO. In
2011 the IATA announced its own targets, which include
improving fuel efficiency by 1.5% annually through to
2020, achieving carbon-neutral growth from 2020, and
cutting net emissions in half by 2050 compared with 2005
levels. Manufacturers are also factoring noise reduction
into new aircraft designs; the Airbus A380 and Boeing 787
Dreamliner both touted as the quietest long-haul aircraft
in service.
The commercial aviation industry has long locked
horns with governments on certain issues, who they
rely on for the provision of airports, fly-over rights, and
air traffic control networks. The sector is still seeking
greater industry–government cooperation on air traffic
management, with immediate focus on securing the
long-delayed Single European Sky initiative. Airlines are
also continuing disputes with governments over prohibitive
33
FULL SPEED AHEAD
regulations and policies such as emissions trading
schemes, foreign investment restrictions, and pricing
constraints. According to the IATA, the provision of subsidies
and other concessions – or even government bailouts
to prevent a local carrier’s demise – is a major barrier
to profitability, given market distortions at local levels
encourage behaviour that affects the greater industry.
already been anticipating its passengers’ desires and
implementing strategies to meet them. “Hainan Airlines
is looking into introducing innovative programmes which
leverage the latest in information technology, allowing
passengers to book meals in advance, reserve paid
services, utilise social media check-in, self-help services
on the ground and make use of in-the-air internet.”
Staying competitive
The IATA reports that 1300 new airlines entered the
global market over the past 40 years – an average of
more than 30 per year, with many of those at the lowcost, short-haul end of the market. While the intense
competition this has spawned has pressured profit
margins and pushed some airlines out of business, it
has also made air transport much more accessible.
The Air Transport Action Group (ATAG) reports that,
in 1945, it took 130 weeks for a person earning the
average Australian wage to make enough money to buy
the cheapest Sydney–London return airfare, whereas
by 2009, it took just 1.7 weeks. Leaving the passenger
spoiled for choice, the industry’s fierce competitiveness
has fostered innovation in all its sectors. The past 25
years have seen the advent of such comforts as personal
in-flight entertainment systems, online booking and
check-in options, flat-bed seats, and the proliferation
of extensive code-share alliances. Liu Lu, President of
Hainan Airlines Company Limited says the airline has
A steady climb of low-cost carriers has set greater
passenger expectations for efficiency, and travellers
can now enjoy more streamlined processes on the
ground with many airlines offering faster self-check-in
options through self-service kiosks, mobile phones, and
the Internet. Some airports already allow passengers
to print their own checked-baggage tags – the trend
likely to advance to a system in which baggage tags
are printed and attached at home. Time-consuming
migration procedures for international travellers are also
being reduced through the proliferation of e-Passports,
smart cards and electronic boarding gates. Immigration
processing that occurs before passengers board a flight,
or even on the flight itself, are also on trial.
34
Combined, these measures have the potential to
revolutionise the airport experience, saving travellers’
valuable time. Chairman of the HNA Aviation Holding
Company Ltd, Wang Ying-ming, believes such measures
will be critical to keeping the industry airborne in the
future. “By 2020, kids of the 1990s will be 30 years
old, and those of the 1980s will be 40 years old. Those
generations are reliant on mobile devices. Everything
should be in the palm of your hand by then. You can’t let
them go to the airport and then tell them there is a twohour delay. The passenger is changing and we need to
keep up with these changes.”
Fuelling up
Pressure on air transport to increase its fuel efficiency
is reshaping the industry. According to the ATAG,
the newest generation of Airbus, Boeing, ATR and
Bombardier aircraft use as little as 3 litres of fuel per
hundred passenger kilometres – comparable to many
modern compact passenger cars. As fleet upgrades
continue, fuel efficiency will improve even further. The
new Boeing 787 Dreamliner is predicted to use 20%
less fuel than its predecessors, while Airbus claims its
A380 is approximately 15-20% more fuel efficient than
the aircraft it has replaced. By 2050, the IATA envisions
efficiency reductions of a further 70% from 2010,
achieved through changes in aircraft configuration,
improved engines and engine architectures, as well
as the introduction of advanced information-sharing
initiatives.
The green light
Greater fuel efficiency will also have a positive effect
on carbon emissions. While aircraft-generated CO2
emissions at per-passenger level have halved over the
last forty years, at an industry-wide level, the rate has
increased considerably due to a higher volume of flights.
The IATA says investment in alternative biofuel technology
will be key to achieving its carbon reduction targets, in
particular those produced from algae, jatropha, and
camelina, which the IATA claims can reduce aviation’s
carbon footprint by 80% over their lifecycle.
Hainan Airlines was the first carrier in China to execute
the IATA’s recommended fuel efficiency gap analysis in
2008, introducing a number of energy-saving measures
including fuel efficiency practices that save around
30,000 tons of aviation oil each year. “Hainan Airlines
will continue to improve its operational fuel efficiency
by optimizing its fleet structure and implementing the
management of aviation oil,” says Liu Lu. “We plan to
lead a culture of energy saving and emission reduction
among China’s airlines.”
Changes in the air
New innovations are seeking to radically alter civil
aviation’s established design norms, such as the “double
bubble” aircraft shape (imagine two cigars set side-byside) or the more radical “blended wing body” that usurps
the traditional cigar-tube-with-wings design. Improved
aerodynamic efficiency within such models also means
35
FULL SPEED AHEAD
they are more fuel efficient and can operate off shorter
runways than their contemporary counterparts. The
positioning of their engines also makes them quieter
than present-day aircraft, while the cumbersome, timeconsuming passenger loading and unloading process
would be greatly improved due to their internal layouts.
Looking further ahead, we’ve already seen glimpses of
what might greet air tourists decades into the future.
While supersonic air travel is buried under the dust
of Concorde’s retirement in 2003, hypersonic travel
might yet become a reality. The European Space
Agency is developing plans for an aircraft that would
fly at more than five times the speed of sound (twice
as fast as Concorde). Powered by a turbo-ramjet
engine, such an aircraft could conceivably transport
passengers from Europe to Australia in less than four
hours. Taking a cue from nature, another innovation
being investigated is multiple aircraft flying within tight
aerodynamic formations, much like a flock of birds. Such
arrangements could offer enhanced fuel efficiency and
beneficial information sharing between aircraft. Perhaps
more fanciful, but not beyond the realms of possibility
according to Airbus, is the introduction of transparent
aircraft fuselages. The see-through cabin membrane
would offer passengers a panoramic view of the
mountains below and the stars above, surely delighting
some while no doubt terrifying others.
36
Taking off in China
With civil aviation’s next wave of growth forecast to spring
from the Asia–Pacific region, China’s carriers are preparing
for intense competition domestically and abroad. “China is
going to be big for aviation in the next two decades,” says
chairman of the HNA Aviation Holding Company Limited.
“This is especially true when it comes to the middle class.
The changing demographics and one child policy means
that people have more income to spend and will retire
earlier. It’s a huge market for commercial aviation.”
“We are planning to launch more transport capacity in
the domestic market,” continues Mr Wang. “We are also
vigorously developing our international routes, adding
routes in Western mainstream markets and putting in
efforts to explore Africa, Russia, and other emerging
markets.”
As China’s economic miracle has carried the nation’s
influence sky-high, its civil aviation industry has followed
closely in its contrail. Once reliant on technology
produced by Americans and Europeans, China is picking
up speed in the aircraft manufacturing market with its
upcoming Comac C919. And as the industry gears up
for a new influx of air traveller s, Hainan Airlines will
be ready to invite them to step on board its fleet and
experience safe, comfortable, and enjoyable flight –
another 20 years into the future, and beyond.
Hainan Airlines 24-hour Reservation & Customer Service: 86-898-950718
Reservation & Customer Service for Europe: 00-800-8768-9999
Reservation & Customer Service for Russia: 810-800-8768-9999
Reservation & Customer Service for North America: 888-688-8813
www.global.hnair.com
www.hnair.com
Project managed by The Economist Group

flying high - myCARGO Airlines

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