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View Full Version : State owned = Okay


Typhoonpilot
01-17-2018, 03:44 AM
Guess it just depends which ones the U.S. majors are buying stakes in ;)

ANALYSIS: China drives efficiency at state-owned airlines

17 January, 2018
| SOURCE: Flight Dashboard
| BY: Mavis Toh
| Singapore


Chinese state-owned carriers could become more competitive on the international stage, following the change in their parents' ownership structures.

Earlier this month, Air China and China Eastern Airlines both disclosed that their parent companies Ė China National Aviation Holding and China Eastern Air Holding, have converted from state-owned enterprises into limited liability companies. China Southern Airlines is expected to make a similar announcement at some point.

This follows the Chinese government's announcement last year that all major SOEs will be converted into joint-stock or limited liability companies by the end of 2017. This is a push to introduce mixed ownership between the government and private sector, aimed at driving efficiency in often-bloated SOEs, separate government work from the day-to-day management of businesses, and bring these firms more into line with corporate practices.

Corrine Png, chief executive of transport equity research firm Crucial Perspective, says the reform will help to improve the level of information disclosure, transparency, performance and governance of the airline holding companies. This is important because Chinese carriers are increasingly pursuing growth on international routes, exposing themselves to stiff competition.

"Improving the quality of corporate disclosure and governance at the parent level is a significant step that will help drive the Chinese airlines' commercial strategies and performance monitoring, improving their competitiveness further as they continue to expand on international routes and gain market share," she adds.

A BOOST FOR PRIVATE MONEY

The move could also pave the way for more private investment in state-owned airlines. Last week, China also made it easier for state and private Chinese companies to invest in the country's civil aviation industry, in a bid to boost its development.

Under the revision, state-owned and private investment entities may individually or jointly invest in the civil aviation industry. It has made clear that key players Air China, China Eastern and China Southern must, however, remain majority controlled by state-owned shareholders.

The three carriers are already listed on the Shanghai and Hong Kong stock exchanges, where investors can take a stake, and a number of transactions have taken place in the past years.

In 2015, Delta Air Lines acquired 10% of China Eastern's Hong Kong-listed shares for $450 million. This translates to a 3.55% stake in the Chinese airline. The airline's president has also said that it will work to attract other investments, and reduce the stakes held by state-owned enterprises.

Last year, China Southern also sold a 2.68% stake to American Airlines for HK$1.55 billion ($198 million). American also has an observer on the Chinese carrier's board, without any voting rights. This makes Air China the only state-owned operator without a foreign investor.

As Beijing attempts to loosen its grip and liberalise the industry, and as Chinese carriers continue to aggressively pursue international growth, more foreign partnerships and investments can be expected. Any relaxation in ownership and investment rules, either at the parent or airline level, would thus be beneficial.

More quickly, changing the parent companiesí ownership could see more private investment in the parents' various subsidiaries, such as ground handling, catering or airfreight logistics.

JOINT VENTURES ABROAD?

Joanna Lu, Flight Ascend Consultancy's head of advisory Asia, says that besides the potential "slight dilution" of state-owned capital in the airlines, the new ownership structure could also lead to the separation of ancillary business from the core airline operations. Joint ventures, partly funded by non-state-owned capital, could also be incorporated to enter new markets outside China.

Analysts add that SOEs have the disadvantage of having to answer to political and social objectives that may not be in line with their business strategy or financial goals. Politics could also interfere with business decisions, especially in international market assessments and fleet acquisitions for airlines, says Lu.

She adds, however: "The three state-owned airlines already have the majority of the market share, so it does make sense to introduce more dynamics into the market."

The easing of control over the Chinese aviation industry is definitely a step in the right direction. Market forces are essential for greater efficiency and competition.


sailingfun
01-17-2018, 03:51 AM
You miss the only salient point. We donít have open skies with China. If you want to participate in open skies to the EU you canít be state owned. I understand that the oil boom will come to a end and the ME3 are the hope for a relevant industry for the region but they still donít qualify for open skies.

Typhoonpilot
01-17-2018, 04:06 AM
You miss the only salient point. We donít have open skies with China. If you want to participate in open skies to the EU you canít be state owned. I understand that the oil boom will come to a end and the ME3 are the hope for a relevant industry for the region but they still donít qualify for open skies.


.....but the Chinese carriers are capacity dumping in the Pacific and the U.S. majors are pulling out of markets as a result. DAL no longer serves Taipei or Bangkok, for example. They outsource that flying to their JV or code share state owned partners.


sailingfun
01-17-2018, 06:49 AM
.....but the Chinese carriers are capacity dumping in the Pacific and the U.S. majors are pulling out of markets as a result. DAL no longer serves Taipei or Bangkok, for example. They outsource that flying to their JV or code share state owned partners.

Great, the US has no ability to stop them. They can add all the flights they want. They canít however add all the flights they want to the US. They have to work within the current bilateral agreements. You have however nailed the reason open skies does not exist between the US and China.

Half wing
01-17-2018, 07:20 AM
.....but the Chinese carriers are capacity dumping in the Pacific and the U.S. majors are pulling out of markets as a result. DAL no longer serves Taipei or Bangkok, for example. They outsource that flying to their JV or code share state owned partners.

Whatís your point? That US carriers are hypocrites? Here you go again...

Al Czervik
01-17-2018, 07:38 AM
.....but the Chinese carriers are capacity dumping in the Pacific and the U.S. majors are pulling out of markets as a result. DAL no longer serves Taipei or Bangkok, for example. They outsource that flying to their JV or code share state owned partners.

Can I ask who you work for and where that company is based?

captjns
01-17-2018, 03:28 PM
Can I ask who you work for and where that company is based?

Doesnít make a difference the company the gentleman works for. What matters is what U.S. carriers are doing in the name of code sharing which in reality is out sourcing. So which outsourcing carrier in the name of code sharing do you work for?

Al Czervik
01-17-2018, 05:24 PM
Doesnít make a difference the company the gentleman works for. What matters is what U.S. carriers are doing in the name of code sharing which in reality is out sourcing. So which outsourcing carrier in the name of code sharing do you work for?

Iím sorry, are we not allowed to ask questions on this forum?

Caveman
01-17-2018, 05:34 PM
Troll Alert....look closely at the employment history of those posting

GogglesPisano
01-17-2018, 05:36 PM
A large part of the increase in Delta pilot blockhours ó including international ó are due to our JVís. Plus our profit-sharing is an added insurance policy. Iíd add graphs and charts but some of you wouldnít believe them anyway. Donít misunderstand me: Scope is the Section 1 for a reason and these agreements and block hours need to be watched.

The ME3 threat is a whole different animal. They mean to replace their oil wealth with aviation and they have their sights set on the US. Theyíre not interested in JVís ó they just want smaller niche American carriers to feed their subsidized, half-empty 380ís.

Half wing
01-17-2018, 05:43 PM
Can I ask who you work for and where that company is based?

Typhoon and captjns are European pilots who support NAI, WOW, Ryan Air and the ME3. Pretty much all they do is hate on the US airlines. I just figure they are jealous of US pilotís superior flying skills, higher pay, better benefits and more time off.:D

Caveman
01-17-2018, 06:15 PM
The response to the above post by these two will be telling

GogglesPisano
01-17-2018, 06:22 PM
Definitely some sour grapes involved.

NYC Pilot
01-17-2018, 07:51 PM
Typhoon and captjns are European pilots who support NAI, WOW, Ryan Air and the ME3. Pretty much all they do is hate on the US airlines. I just figure they are jealous of US pilotís superior flying skills, higher pay, better benefits and more time off.:D

Typhoon and Captjns are American pilots who have worked here and overseas. I think they see the picture a little more clearly than those of you who have never left the United States. The U.S carriers just recently started making money and investing in new aircraft. Not too long ago, they were not the best product either and the salaries sucked. It's funny how pilots here are fed garbage and refuse to see the perspective from a global viewpoint. There are 22 year old 777 FO's and 30 year old 777 Captains flying for flag carriers around the world so by all means this career is not rocket science. Also, for those of you who think U.S legacy pilots are the best paid, look at what Lufthansa, Air France and KLM pay their pilots. They even have six figure annual pension payments waiting for them post retirement. So please, just save it. Just be glad that times are good in the U.S airline business right now and enjoy the ride but to think this is as good as it gets, I laugh at that..

Typhoonpilot
01-17-2018, 09:11 PM
Whatís your point? That US carriers are hypocrites? Here you go again...

My points for this specific thread are numerous:

1) ALPA has a history of failed strategies that adversely affect U.S. pilots.

2) Most ALPA pilots tend to blindly follow those strategies without seeing where real threats to their career might be coming from.

3) The U.S. carriers seem to be giving away all the potential growth across the Pacific and in Asia to the Chinese (State owned and/or State supported carriers).

So a little bit of discussion to educate pilots is worthwhile. ALPA seems intent on campaigns against foreign carriers and in the process go so far as to try to hurt U.S. manufacturers' ability to sell their products overseas (thus harming other U.S. union workers). They get wound up about specific foreign competitors that their airline CEOs have told them are harmful all while the same CEOs go about outsourcing good international widebody flying to other State owned and supported carriers.

Just for the record, I am American and I do support the success of U.S. carriers and their workforce. I'm based in Taipei and can no longer ride on Delta (formerly NWA) flights to get back and forth to the USA. I have another home in Thailand where I can also no longer ride on Delta to get to and from the USA. I would never ride on China Eastern for long haul travel, or any of the other Chinese State owned carriers.

When Delta pulled out of Bangkok I mentioned it to some NWA 747 pilots and they did not even know. Which is why this kind of education is important. There are probably quite a few domestic Delta pilots who have no clue what is going on over here. Instead of writing letters to Congress about foreign competitors that you will never have any control over, how about more forcefully protecting your current international flying before it all gets outsourced?

Instead of trying to block the sale of U.S. equipment overseas how about writing letters to Congress to get more favorable treatment for U.S. airlines to purchase U.S. manufactured products? These are actions that will result in something known as a "win-win".

awax
01-17-2018, 09:52 PM
In 2015, Delta Air Lines acquired 10% of China Eastern's Hong Kong-listed shares for $450 million. This translates to a 3.55% stake in the Chinese airline. The airline's president has also said that it will work to attract other investments, and reduce the stakes held by state-owned enterprises.

Last year, China Southern also sold a 2.68% stake to American Airlines for HK$1.55 billion ($198 million). American also has an observer on the Chinese carrier's board, without any voting rights. This makes Air China the only state-owned operator without a foreign investor.



To add to the conversation regarding Air China's link with UAL via the Star Alliance:

Air China joined Star Alliance in December 2007. As a Star Alliance member and the only flag carrier of China, Air China operates a worldwide network of more than 6,000 flights every week from its hub in Beijing, linking 143 destinations in 30 countries and regions.

The United pilot's CBA has [arguably] strict language on JV which essentially requires "metal in the market" and prohibits an agreement similar to what DAL and AMR both have with their respective Chinese counterparts. UAL and ALPA will begin negotiating by April with the goal of closing on a new CBA by the end of this year. It doesn't take very much imagination to guess what might be on their wish list regarding scope restrictions.

Turbosina
01-17-2018, 11:06 PM
I would never ride on China Eastern for long haul travel, or any of the other Chinese State owned carriers.


Just curious, can you clarify why? Is China Eastern's safety record that bad? I've never flown on a Chinese-state owned carrier. I travel extensively around Asia, and for transpacs am usually on United, Cathay, KAL, JAL, Asiana, EVA, and China Airlines. I've always wondered how the Chinese state carriers keep rates so low. That said, the safety record of KAL and China Airlines used to leave much to be desired, and Asiana hasn't done itself any favors recently in that department.

So, just curious why you wouldn't ride on one of the former CAAC carriers. (What did they call it back in the day? "Crashes And Always Cancels" if I recall...)

Typhoonpilot
01-18-2018, 01:22 AM
Just curious, can you clarify why? Is China Eastern's safety record that bad? I've never flown on a Chinese-state owned carrier. I travel extensively around Asia, and for transpacs am usually on United, Cathay, KAL, JAL, Asiana, EVA, and China Airlines. I've always wondered how the Chinese state carriers keep rates so low. That said, the safety record of KAL and China Airlines used to leave much to be desired, and Asiana hasn't done itself any favors recently in that department.

So, just curious why you wouldn't ride on one of the former CAAC carriers. (What did they call it back in the day? "Crashes And Always Cancels" if I recall...)


Safety is certainly a concern, but it's more about the nightmare of a travel experience as a passenger. Some examples:

1) Use of Personal electronic devices, even in the aircraft mode, are banned during takeoff and from 30 minutes prior to landing (basically top of descent). Use of smart phones, even in the aircraft mode, is banned for the entire flight. Only Tablets and Laptops are allowed.

2) Numerous fasten seat belt announcements, at great length, for every small ripple of turbulence.

3) Connecting domestic and international procedures from the dark ages. To the point that in some cases on a connection you must exit through baggage claim and go back to the check-in to get your next boarding pass.

4) Service standards and quality in First and Business is years behind the western standard.

rightside02
01-18-2018, 04:45 AM
Couldn't speak for foreign carries all too much as I have no real international experience flying mostly domestic .

However being based in JFK nearly 8 years I can tel you this . China Eastern and their Cargo version and a bit of Aeromexico , dudes get lost and make incorrect taxi instructions nearly every single time ... left turns instead of rights and now yiur dead to head with another 747 having to be tugged backwards . Biggest disasters everytime they land . The controllers literally are angles dealing with those guys in my eyes .

Half wing
01-18-2018, 05:14 AM
My points for this specific thread are numerous:

1) ALPA has a history of failed strategies that adversely affect U.S. pilots.

2) Most ALPA pilots tend to blindly follow those strategies without seeing where real threats to their career might be coming from.

3) The U.S. carriers seem to be giving away all the potential growth across the Pacific and in Asia to the Chinese (State owned and/or State supported carriers).

So a little bit of discussion to educate pilots is worthwhile. ALPA seems intent on campaigns against foreign carriers and in the process go so far as to try to hurt U.S. manufacturers' ability to sell their products overseas (thus harming other U.S. union workers). They get wound up about specific foreign competitors that their airline CEOs have told them are harmful all while the same CEOs go about outsourcing good international widebody flying to other State owned and supported carriers.

Just for the record, I am American and I do support the success of U.S. carriers and their workforce. I'm based in Taipei and can no longer ride on Delta (formerly NWA) flights to get back and forth to the USA. I have another home in Thailand where I can also no longer ride on Delta to get to and from the USA. I would never ride on China Eastern for long haul travel, or any of the other Chinese State owned carriers.

When Delta pulled out of Bangkok I mentioned it to some NWA 747 pilots and they did not even know. Which is why this kind of education is important. There are probably quite a few domestic Delta pilots who have no clue what is going on over here. Instead of writing letters to Congress about foreign competitors that you will never have any control over, how about more forcefully protecting your current international flying before it all gets outsourced?

Instead of trying to block the sale of U.S. equipment overseas how about writing letters to Congress to get more favorable treatment for U.S. airlines to purchase U.S. manufactured products? These are actions that will result in something known as a "win-win".

We agree that scope is the biggest concern/issue facing US pilots today. As Googles mentioned, it is the reason scope is section 1 in the contract. I also agree with you that US airlines should be getting a better deal on U.S. products, but it is currently the other way around. As far as bending over and letting unfair competition take market share, no thanks. Iím all for putting the brakes on that.

captjns
01-18-2018, 05:51 AM
Iím sorry, are we not allowed to ask questions on this forum?

No cognac or breadsticks for you :p

captjns
01-18-2018, 05:52 AM
Typhoon and captjns are European pilots who support NAI, WOW, Ryan Air and the ME3. Pretty much all they do is hate on the US airlines. I just figure they are jealous of US pilotís superior flying skills, higher pay, better benefits and more time off.:D

Cognac and breadsticks for you:)

galaxy flyer
01-18-2018, 06:10 AM
3) Connecting domestic and international procedures from the dark ages. To the point that in some cases on a connection you must exit through baggage claim and go back to the check-in to get your next boarding pass.

Thread drift, but my one experience was almost Swiss-like in precision. Got on a domestic flight Shenyang to Beijing on some domestic airline to connect to Air China. Jeppesen ITP said it was all worked out, but didn’t have details, esp I arrived on a crew visa, but departed as passenger. Usually means some time in the office. Parked at remote stand for an hour connection, I figured I was missing the flight to JFK for sure. Get off the the bus, there a Jeppesen rep holding a card with my name and the letter on the visa issue. Escorted thru immigration and at gate early enough for a coffee. Bags made it, too.

GF

intrepidcv11
01-18-2018, 11:40 AM
If the former NW guys are anything like the Whale drivers at UAL, Iím sure many knew about losing a BKK layover and are full of pitchfork worthy rage. For some reason a lot of guys really like BKK layovers and also HKG on sundays.