China Eastern sees growth potential in Shanghai

Shanghai's 72-hour visa waiver and the fast integration of the Yangtze River Delta region will combine to help China Eastern Airlines Co Ltd cement its reputation as a major international airline, its president said.

Shanghai-based China Eastern plans to develop regional tourism products, order more medium- and long-range aircraft, and broaden its overseas sales network to attract foreign passengers, Ma Xulun said Tuesday.

Ma said that about 47 percent of the airline's revenue comes from international business, and a higher percentage is necessary to gain a global reputation.

"Our vision is to build China Eastern into a world-class airline. We want to realize this goal by fully leveraging on Shanghai's geographic advantage as a transportation hub," Ma, a national legislator, said on the sidelines of this year's session of the 12th National People's Congress.

One step is to transform Shanghai's stereotype as a business-only destination into one for leisure travel, he said.

The high-speed railway is a game changer that makes it possible to traverse the Yangtze River Delta region, including Shanghai and neighboring Jiangsu and Zhejiang provinces, in just an hour.

Backed by dominant market shares in the city's twin international airports, with 40 percent in Shanghai Pudong International Airport and more than 50 percent in Shanghai Hongqiao International Airport, China Eastern has counted on diverse intercity travel packages to attract foreign customers.

To consolidate the market, the carrier entered into an agreement with the Shanghai Railway Bureau to sell combined air-railway tickets connecting 13 cities that cost less than they would if purchased separately.

The tourism sector of the parent China Eastern Air Holding Co is also undergoing a restructuring program in which it plans to merge its tourism assets with another subsidiary, Shanghai Airlines.

In 2012, 1.59 million transfer passengers traveled through Pudong airport, up 17 percent from a year earlier, according to the company's website. International transit claimed a predominant 88.4 percent among all transfers, it said.

"The high transition rate used to be a largely neglected figure. But we need to revitalize all transfer passengers and bring the visa-free policy into full play," he said.

For instance, Hong Kong International Airport boasts an annual 2.7 million transit passengers who spend HK$5,000 ($645) on average during their stay. It stimulates the local economy and boosts the city's status as an international hub, Ma said.

But he noted the scope and depth of the current policy has put a lid on the market potential. Seoul, for example, permits a visa-free stay of 30 days to six months to visitors from 107 nations.

"A further loosening of the policy is needed. I am looking for an extension of at least seven days," he said.

The global aviation industry is severely unsettled by sluggish demand worldwide. The airlines sector had an average 1 percent profit rate last year, Ma said, citing data from the International Civil Aviation Organization.

But his company is betting on a moderate revival in light of a pickup of the US economy.

So far, China Eastern has ordered 51 Airbus A330 jet airliners and 20 Boeing 777 airplanes recently to serve medium- to long-distance travel.