Saturday, January 3, 2009

Jetset: Turbulent Times

Falling demand means delays in new flights

For air travelers, the impact of the global economic downturn has been mixed. The plunging price of oil – after hitting almost USD 150 per barrel last summer – has forced even cash-strapped airlines to take a second look at fuel surcharges. Many carriers, including China’s “Big Three,” are finally reducing this absurd levy.

Air China, China Eastern and China Southern, as well as Hainan Air, have all lowered fuel surcharges on major international routes, cutting the original amount of RMB 1,100 by about 15 percent on flights to Europe, North America and Australia. They have also halved it to RMB 550 on flights to the Middle East (home of most of the word’s oil reserves).

Of course, airlines have always factored oil prices in their airfares; it’s not like they had been flying without jet fuel before the latest oil price surge. It is clearly ridiculous to charge consumers twice for the same thing, especially when base fares (ticket prices before taxes and fees) are also going up.

Falling oil prices, however, are “too little, too late” to save the world’s airlines from another bleak year. IATA, the global airline trade group, expected the struggling sector to lose a combined USD 5.2 billion for 2008, with both passenger and cargo volumes shrinking for the first time in five years.

What can airlines do? They could raise fares, but that would only depress already-low demand. They could go further with their nickel-and-dime approach – except there is little left for them to charge after they take away free pillows, blankets, headsets, meals, drinks, checked-in luggage and preferred seats. (Speaking of preferred seats, it was really a sign of times when Singapore Airlines, long hailed the standard-bearer of premium services in all cabins, recently decided to charge economy-class customers USD 50 per flight segment for choosing to sit in an exit-row seat, which offers more legroom.)

The only option left is to cut capacity. A China Eastern official told local media that the carrier had parked more than 20 planes since last April. He also exposed the cost of unprofitable routes in the current economic environment, with the airline losing RMB 2 million every time it flies from Shanghai to New York.

That may explain many US carriers’ change of heart on China routes. It was not long ago when they fought hard for a coveted government-allocated slot to fly here, and winners deployed their biggest jets for the flights. Amid gloomy economic news, however, several US airlines have delayed the launch of their new China flights, e.g. United’s San Francisco-Guangzhou (postponed to spring 2009), and American’s Chicago-Beijing and US Airways’ Philadelphia-Beijing (both to spring 2010).

Some US carriers have also reduced frequencies for existing flights during the winter, e.g. Delta cutting Atlanta-Shanghai from daily to five times per week. Anticipating slow travel demand during the Chinese New Year holiday, United is even suspending Washington-Beijing (already cut from daily to four times per week) for the entire month of February – an inauspicious sign for the Year of the Ox. Steven Jiang

This article was originally published on page 112 of the January 2009 issue of The Beijinger magazine.

Jetset: "Is ABC really DOA?"

Catching a holiday flight is rarely a pleasant way to start the holidays. After paying top dollar for the tickets and cramming presents into your suitcases, you start dreading the huge crowds in the terminals and on the planes while trying to calm the screaming kids. So the last thing you want on your way to the airport is to get stuck in Beijing’s notorious traffic, which has returned with a vengeance following the easing of vehicle restrictions imposed during the Olympics.

The solution to your dilemma can be as simple as ABC, literally. Airport Beijing City, the rather oddly-named express train service of the capital’s subway system, has been whisking passengers from Dongzhimen and Sanyuan Qiao to the airport since late July. Our city’s fastest subway – though most of its tracks are above surface – travels at 110 kilometers per hour and covers the 27-kilometer journey in 20 minutes – an unimaginable endeavor for taxicabs during rush hour! Trains depart every 10 minutes between 6am and 11pm. At RMB 25, the one-way ticket is a bit more expensive than the 16 yuan airport shuttle bus, but still way cheaper than your typical taxi fare, which can easily top RMB 100 with toll included.

By all measures, ABC is likely to be the best ground transportation option for a Chinese airport, and wins hands down over Shanghai’s much-touted magnetic-levitation (Maglev) train, which has become a symbol of the country’s white elephant projects. Compared to the Maglev, ABC’s operating hours are longer and its service more frequent. It also actually brings you into the city. In contrast, while the Maglev trains can float above the tracks at a top speed of 430 kilometers per hour and complete a 30-kilometer trip in less than eight minutes, they unload travelers from the remote Pudong airport to an equally inconvenient suburban subway station. Although ABC may not have bragging rights to a “cool” technology, it’s definitely more reliable and affordable (with the ticket price only half of the Maglev’s).

So why hasn’t ABC turned into a success like its counterpart in Hong Kong? The challenges of modifying traveler habits and cultivating loyalty aside, ABC has some innate flaws that may drive away potential riders. Unlike the Airport Express in Hong Kong, you are not able to obtain your boarding passes at the two in-town stations. Airline counters are slated to open at these stations in the future, but even then, passengers will not be able to check their luggage. Also, the design of the Dongzhimen terminus seems to have focused more on aesthetics (nice red columns) than user-friendliness (no escalators or elevators from the platform to the ground level). And even the platform itself – at around three meters wide – is inexplicably narrower than those in other subway stations, making the place cramped with people and luggage during busy times; meanwhile, a lack of luggage space on the trains makes the ride equally as stifling. Finally, there have been complaints about noisy trains and the poorly ventilated Terminal 3 station. Why can’t ABC take a page from the impressive Airport Express service in Hong Kong? Alas, it’s “one country, two systems” after all. Steven Jiang

This article was originally published on page 32 of the December 2008 issue of The Beijinger magazine.