China Southern Airline Competition Anaylsis

Topics: Airline, Low-cost carrier, Delta Air Lines Pages: 12 (3859 words) Published: May 6, 2012
Tourism Management Essay

MSC Tourism management

Tourism organisations needs to respond effectively to the increasingly competitive business environment (China southern airline as sample)


Transport is a key factor of tourism, providing the important connection between the tourist points of origin and destinations. Essentially, transports provide the services for development to the tourist destination. In contrast, the increasing demand of destination will bring the benefits to the transport industry. (Graham, Papatheodorou and Forsyth 2008) Hence, the relationship between transport and tourism seems to be interdependent and interactive. In addition, air transport as one kind of the transport tools, it has the significant place. The demand of the air transport is increasingly and has grown 6% from pass 40years (include domestic and international), in term of revenue of passenger kilometers. (O’ Connell, 2006), and air transport also an important industry contributing much to world economic development.(Hanlon, 2007) however, the air fare in airline industry have consistently decreased since the pass 30 years by 2.5% per annum.( O’ Connell,2006) This phenomenon is relate to the global airline industry competitive environment increasingly stiff and drastic and the new technology in recent years. This competition like many other industries will dramatically affected by the different kinds of factors such as the oil price, economy performance and environmental concerns.

Initially, this essay will use the Porter’s five-force model to illustrate the variety of completive factor in the current airline industry, and then China southern airline will be chosen as the significant tourism organizations simple which will combine Strengths and weakness analysis to show how to react effectively to the increasingly international and domestic airline completive lastly some recommendations will be represented in line with above discussion

China southern airline as significant example, because which is China’s largest airline (rank 15with revenue 11317million US dollar from top 150 airline in the world) (airline business 2010) and connect with almost every civil hub in China. In addition, the airline also has an expanding network with a comprehensive hub at Guangzhou serving Asia, the Pacific and Europe. They provide service to 169 countries and regions. (CS air 2011) ‘China Southern Airlines 2010 net income of CNY5.8 billion ($883 million), fifteen times greater than the CNY381 million net profit earned in 2009, and load factor also increase to 79.2%, up 3.9 points over 2009’. (Cantle 2011) .It is depend on the fast-growing Chinese economy activates and the appearance of a sizeable ‘middle class’ of affluent consumers.(Hanlon 2007)

The current competition
There are hundreds of airline in the world. (Worthington and Brittion 2009) some are the big airline like the American Airways, United, Delta and Air France-KLM and some are smaller like the low-cost airline such as Ryanair air and Air AISA. In China, the Air China and China Eastern are other two of three larger and backbone airline, the Hainan airline an official 5star airline (award by skytrax) and some low-cost airline such as Spring air, they are the huge power dirty competitors to China southern airline. The competition in airline industry is very stiff and drastic. In year before 2008, there are26 airline had bankrupted or had gone out of business such as ATA, XL and Oasis. (Worthington and Brittion 2009)This was affected by the rising price of fuel and locked in the fuel prices in the high level when the fuel price drop down they continued to pay inflated priced for fuel. In addition, the worldwide financial and banking crisis affects the economic downturn which shapes the demand of the traveler particularly from high-fare business passenger. (Doginis 2010) The last main factor will be the air transport liberalization and deregulation.

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