China Southern Airlines largest in Asia

May 12, 2010

, SHANGHAI, May 12 – China Southern Airlines is now Asia\’s largest carrier by passenger numbers after overtaking troubled Japan Airlines, according to figures provided by the two companies.

China Southern soared in 2009 on the back of booming domestic demand and government assistance. In stark contrast, JAL is restructuring after filing for bankruptcy in early 2010 in one of Japan\’s biggest corporate failures.

China Southern actually overtook JAL in 2008, when its passenger volume rose to 58.24 million, according to data supplied by the Chinese carrier to AFP on Wednesday.

The airline, which boasts China\’s biggest fleet, extended its lead even further last year with a total of 66.3 million passengers, up 13.8 percent.

"Authoritative data shows China Southern Airlines surpassed JAL as (Asia’s) top carrier in passenger volumes in 2008, but the story has only been publicised lately," an official with China Southern told AFP.

"It is also a sign of how China’s economy expanded so fast despite the financial crisis," added the official, who asked not to be named.

China Southern, a SkyTeam alliance member run by the state, may be less well known internationally than flag carrier Air China, but its focus on shorter-haul domestic services is considered key to its success.

JAL meanwhile carried 46.87 million passengers in 2008 and 41.98 million in 2009, according to figures provided by the airline.

The struggling Japanese flagship is restructuring with the help of a state-backed turnaround fund after it filed for bankruptcy in January.

It has said it will slash international and domestic capacity over the next year by 40 percent and 30 percent respectively, compared to the 2008 fiscal year.

Combined with previously announced route-cutting plans, JAL will cease to run 28 international routes and close 11 international bases, while 50 domestic routes will be terminated, along with eight offices.

China Southern, in contrast, has said it expects passenger numbers to rise 13 percent in 2010 to nearly 75 million passengers.

Analysts said China Southern\’s rise to the top in Asia was hardly a shock.

"It is not surprising because the demand from China’s domestic market is very robust," said Li Shurong, an aviation analyst at Shenyin and Wanguo Securities.

"Every year the average growth rate stays above 10 percent. No other country in the world has this kind of double-digit growth."

The growth in passenger volume means China\’s airlines will eventually top the global charts — positions currently help by US airlines — and consolidation could accelerate the process, Li said.

The Guangzhou-based airline announced last month it had swung back to profit in 2009 thanks to a government bailout and improving domestic demand.

Since late 2008, Beijing has injected nearly two billion dollars into the nation\’s top three carriers, including China Southern, to help them weather slowing demand caused by the financial crisis.

Shares in China Southern closed 1.4 percent higher at 6.76 yuan (99 US cents) in Shanghai on Wednesday.

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