The extraordinary growth in China's air travel market has come as a welcome boost for the world airline industry but it is also sparking serious confrontation between rival carriers of two Asia-Pacific nations over route rights.
In South Korea, Korean Air and rival Asiana Airlines are tussling over direct services from Pusan to Beijing and Shanghai, with Korean laying claim to Pusan-Beijing, the sector which is expected to produce the highest load factors.
Asiana wants both routes, claiming it already suffers from a serious imbalance in the market. 'There has been a big gap in combined market share in China between Korean Air and Asiana Airlines in 1995, leading to a big difference in operating profits,' argues Asiana managing director Kim Hong-rae. He says that routes already allocated to KAL are more lucrative with higher load factors and argues that the new capacity 'should be given to us in a bid to ease the imbalance.'
But KAL is invoking government regulations saying new routes should be awarded evenly between the two airlines. The standoff will allow Chinese competitors to steal a march on the Korean carriers. Air China began Beijing-Pusan services in early May while China Eastern will launch Shanghai-Pusan flights in June.
The row in Australia started when Qantas, which already operates Sydney-Beijing, scheduled twice-weekly services to Shanghai from August even though it hadn't yet been granted the rights. Ansett countered with its own bid for the highly lucrative route, creating a conflict the authorities will have to resolve.
Tom Ballantyne
Source: Airline Business
