Tom Otley talks to Jamie Cassidy, British Airways’ area general manager for the Middle East and Asia Pacific, about the new route to Chengdu and further expansion in the Far East
This is the fourth China route for British Airways
Yes, I think Hong Kong was some time in the 1930s, maybe 1936, and then Beijing was 1980 and Shanghai was 2005.
BA is using a B777 on the route, but it will switch to the Dreamliner next year... presumably the B777 was the only option?
Yes, the B777 was the only option for now. A B747 is too big, the B767 doesn’t get here, and that’s why we are planning the B787 Dreamliner next summer and moving from three to five flights each week. The B787 hasn’t got a first class on it, so although the B787 is a smaller aircraft, it won’t be a huge difference in seats between the two aircraft, though obviously the increase in frequency will add seats.
[From our point of view] The B787 were designed for two things - to retire the B767s and to expand, and the Bmi slots have given us the ability to expand and you’ve heard [IAG chief executive] Willie Walsh talk about expanding into Asia. The B787-8 is good for expanding into secondary cities – it suits long range, is incredibly economical and so it’s ideal for expanding into destinations that we call 'thin'.
What are the options for people flying on to other destinations from Chengdu?
I think the vast majority will be terminating here [at Chengdu], but we hope we can use this airport as a hub. We are talking to Sichuan Airlines for an interline relationship using Chengdu as a way of feeding a much wider hinterland than we currently fly to – they are one of the biggest carriers out of Chengdu.
At the other end, Heathrow, people will fly to the UK regions and western Europe - Spain, France, Portugal. London is great for serving western Europe, but not particularly good for northern or eastern Europe because it’s a back track. It’s almost as quick to go east or west, so New York, Boston, and Washington come into range as well as Latin America. You take off from Chengdu, fly north over Europe and London isn’t too far off the ‘Great Circle’ route to Latin America and Brazil where there is an increasing flow of traffic from China to Brazil.
So how big do you think the market for this route is in London and the UK?
It’s relatively small at the moment. Our view is that most of the passengers for this route will come out of China. The growth there is absolutely amazing. I think last year 80 million people went out of China and the vast majority were independent rather than government-sponsored. So initially it will take people from China on to London and beyond.
Yes, it will be predominantly sold in China, but that’s not to say we won’t have people from the UK - a mix of business people and leisure wanting to see the giant pandas and western China. Chengdu has good cuisine, and outside the city the countryside is quite remarkable. It’s also as good a way into Tibet as any.
It seems strange that your new Oneworld partner Qatar Airways, an airline you sponsored to join the alliance, has also just started flying to Chengdu and will be competing with you.
Well you heard Willie [Walsh] saying that we aren’t allowed to do third party codesharing with Qatar over Doha into China, so our market is point-to-point, subsidised with transfer traffic. We compete very aggressively with Qatar and will do so, but ourselves and Qatar Airways are in different markets.
They want to take people from market A to market C, with Doha as the transit place, whereas we have London and so the vast majority of ours in point-to-point. Plus it’s quite a dogleg from London to Chengdu via Doha. We have the good fortune to be based in London, so we are not competing for the same transfer traffic as the other network carriers.
How has Chengdu airport helped with this route?
They are giving us some help in terms of marketing funds both here in the UK and I’m sure if you spoke to some airports in the south east of England they would say they are doing the same. It’s quite known that airports help airlines to market new routes.
It takes quite a long time to get a route to profitability, and given that this is a new market - the west of China is almost a pioneer market. It’s not one we know, and if you asked the man in the street in London whether they knew where Chengdu was or even if he’d heard of it, he might not have, so we are taking quite a lead here. The help from the airport has pushed us over the line in the decision of doing this route.
If you get support from Chinese airports and it doesn’t matter if someone in the UK has heard of the city, why not fly to lots of other Chinese destinations?
The key is which airport has the best hinterland. This is commerce-driven, so from our perspective has more potential and is a better long-term prospect for both leisure and business.
So will there be more Chinese routes for BA?
We look at it with a wider perspective. We would all recognise our focus has been on the North Atlantic. Increasingly the world’s centre of gravity is moving to the east in terms of economics, culture, and politics. So if you look what BA is doing, we were the first European carrier to operate to Haneda, last year we went into Seoul and this year we are starting to operate to Chengdu. So we are expanding into Asia on a step-by-step basis, and we have increased frequencies - going daily to Shanghai for instance. The combination of B787 and the Bmi slots allows us to operate to more destinations in Asia, and that’s what we’re doing.
How will you market your flights in China?
We just extended our Shanghai office to incorporate Avios so the loyalty programme will play a part. It’s a huge potential market, but it will take us a long time to break in. At the China end, one of the beauties is that London is such a big financial and commercial centre. There is an increasing amount of Chinese investment in the UK. The UK has got the biggest expat Chinese market in Europe. Heritage, shopping , countryside, the royal family, golf, fishing - there’s an amazing pull that we are lucky enough to be involved in. From the China end of the route, I think it will sell itself.
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