cz scheduling and market analysis 221112

7/29/2019 CZ Scheduling and Market Analysis 221112

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China SouthernScheduling & Market Analysis

November 2012


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Executive Summary

Potential for CZ to operate a split schedule to boost connectivity via CAN

A split schedule maintains good connections to majorChinese cities and improves connections to LHR, ICN & NRT

For the schedule to work effectively, it would be preferablefor CAN-PER-CAN to be increased to 4/weekly with each 2flights operating at different times of the day

The schedule provides for same-day connections to LAX,CDG, & AMS however some connecting vary from 4 hoursup to 8 hours

These connecting times can be improved but willrequire forgoing connections to major cities in China inone direction or rescheduling the LAX/CDG/AMS flights

Cathay Pacific has relatively small market share to LAX, CDG,& AMS opportunity for CZ

Important for CZ to have an efficient connecting product inCAN other Asian and Middle East carriers do this very well


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CZ Connections in CAN


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CAN Hub Makes Sense for Perth Travellers

Flight times compare well with existing hubs such as HKG

CAN HKG SIN KUL SYD DXB

PEK 8,006km 7,994km 8,369km 8,523km 12,218km N/A

PVG 7,332km 7,261km 7,689km 7,911km 11,121km N/A

ICN 8,133km 8,074km 8,509km 8,726km 11,595km N/A

YVR 16,351km 16,295km N/A N/A 15,768km N/A

LAX 17,768km 17,691km 18,009km N/A 15,335km N/A

LHR 15,642km 15,654km 14,783km 14,734km N/A 14,531km

CDG 15,603km 15,614km 14,625km 14,571km N/A 14,272km

AMS 15,286km 15,298km 14,412km 14,365km N/A 14,201km

Travelling via CAN offers competitive total journey timesto Perth compared with other existing hubs

Source: Great Circle Mapper


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Opportunity to improve connections to Canton

Route and to other key markets

Source: AirportIS, KVSTool

Flight From Arrive CAN

CZ328 LAX 05:20 X

CZ348 CDG 06:10 X

CZ308 AMS 06:45 X

CZ340 ICN 12:25 X

CZ3098 TPE 16:35

CZ338 ICN 17:00

CZ390 KIX 17:15

CZ330 YVR 17:20

CZ304 LHR 18:30

CZ386 NRT 19:30

CZ398 MNL 20:00

Flight To Depart CAN

X CZ347 CDG 00:20

X CZ389 KIX 08:30

X CZ3091 MNL 08:50

X CZ337 ICN 09:05

X CZ303 LHR 09:30

X CZ385 NRT 09:30

X CZ3097 TPE 11:30

X CZ329 YVR 14:00

X CZ339 ICN 17:15

CZ327 LAX 21:30

X CZ307 AMS 23:55

Depart CAN Arrive PER

21:30 05:40+1

Depart PER Arrive CAN

08:50 17:15

3 Hours

Key connecting markets

Scheduling is a key success factor to capture market share

Current connections to key European, North American, and North Asian markets require long

layovers, making it difficult for China Southern to compete with other airlines offering shorter

connecting times

Opportunity to schedule flights with limited connecting times & capture larger share of

connecting traffic

Need to continue offering good connections throughout China


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Connections to LAX, CDG, and AMS conflict with

connections to key Chinese cities



CZ328 LAX 05:20

CZ348 CDG 06:10

CZ308 AMS 06:45


08:45 16:55


11:00 19:25


CZ327 LAX 21:30

CZ307 AMS 23:55

CZ347 CDG 00:20

To provide direct connections from LAX, CDG, and AMS to PER means forgoing connections

from key Chinese cities

Arrival into CAN from SHA and PEK start from 11:15am

To provide direct connections from PER to LAX, CDG, and AMS as well as key Chinese cities

means the flight from PER will need to arrive in CAN early to meet the last departures to SHA

and SHE

The last departures from CAN to SHA and PEK are at 19:40 and 20:00 respectively


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Split schedule scenario: potential for better connections

to key cities with alternate CAN-PER-CAN schedule



CZ328 LAX 05:20

CZ348 CDG 06:10

CZ308 AMS 06:45

CZ3391 CGO 10:20

CZ3596 SHA 11;15

CZ3108 PEK 11:45

CZ3548 SHA 12:15

CZ6301 SHE 12:20

CZ340 ICN 12:25


14:00 22:10


23:20 07:35

1 Hours 10 mins


21:30 05:40


08:50 17:15

3 Hours 10 mins


CZ3105 PEK 19:00

CZ6302 SHE 19:40

CZ3595 SHA 20:00CZ320 PEK 20:00

CZ382 PEK 20:00

CZ3620 CGO 20:35

CZ3107 PEK 21:00

CZ327 LAX 21:30

CZ307 AMS 23:55

CZ347 CDG 00:20


CZ337 ICN 09:05

CZ385 NRT 09:30

CZ303 LHR 09:30

CZ3531 SHA 10:00

CZ345 PEK 10:00

CZ3599 NKG 10:10

CZ3537 SHA 11:00

CZ3103 PEK 11:00

CZ3392 CGO 11:10

CZ3799 TAO 11:20

CZ3097 TPE 11:30Flight From Arrive CAN

CZ338 ICN 17:00

CZ3395 CGO 17:00

CZ390 KIX 17:15

CZ3538 SHA 17:15

CZ330 YVR 17:20

CZ323 PEK 17:45

CZ3800 TAO 18:05

CZ3822 NKG 18:25

CZ304 LHR 18:30

CZ3104 PEK 18;45

CZ361 CGO 18;45

CZ3526 SHA 19:25

CZ386 NRT 19:30


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Analysis of Split Schedule

Strengths of the split schedule Good connections to major Chinese cities

Good connections to LHR in both directions

Good connections to ICN in both directions

Good connections to NRT in both directions;

Connections to TPE in both directions although connecting times

are 4-5 hours

Weaknesses of the split schedule

While the schedule provides for same-day connections to LAX,CDG, & AMS, the connecting times vary from 4 hours up to 8 hours

YVR only connects well in one direction

KIX only connects well in one direction

No connections to MNL


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Comparison to Cathay Pacific via HKG

Opportunity for CZ to LAX, CDG, & AMS

Opportunity for CZ to gain market share in LAX, CDG, and AMS where

CX is weak, but it is difficult to create schedule that offers good

connections in these markets

City Current Cathay Schedule to/from PER CX MarketShare

LAX 3/week only with good connections 3.4%

CDG 3/week only; poor connections 3.8%

AMS 3/week only; poor connections 4.8%

LHR Good connections 8.7%

ICN Good connections 38.4%

NRT Good connections 28.3%

KIX Good connections 31.9%

TPE Good connections 28.4%

MNL Good connections 18.7%

Source: KVSTool; All market shares from AirportIS apart from MNL (DIAC)


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Size of Potential Connecting Markets

CityTotal Market

Size (FY12)

Market Description

LAX 68,000Largest North American market from PER; competitive; good yields; longer

distance compared to via east-coast Australia

CDG 47,000Second largest Euro market after the UK; competitive; good yields; longer

distance compared to DXB, SIN

AMS 25,000

6th largest Euro market; competitive; satisfactory yields; longer distance

compared to DXB, SIN

LHR 240,000 Largest market; very competitive; longer distance compared to DXB, SIN;

ICN 25,000Limited number of competitors, all one-stop; strong yields; comparable

distance to HKG

NRT 28,000 Limited number of competitors, all one-stop; strong yields; comparabledistance to HKG

TPE 22,000Competition is full service and LCCs, all one-stop; satisfactory yields;

comparable distance to HKG & SIN

Source: Total Market Sizes from AirportIS are grossed-up by passenger card data (DIAC)


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Connecting markets via CAN


12/1912

Key differences from AirportIS UK market is 2nd highest SIN moves to 3rd

USA and Canada are based on Western Australia as state of residence to include

traffic via east-coast Australia

Country of Residence/Future StayFY11 FY12 FY12 v FY11

Residents Visitors Total Residents Visitors Total % change

Indonesia 714 067 64 954 779 021 755 008 68 078 823 086 6%UK 165 068 240 236 405 304 178 099 236 814 414 913 2%

Singapore 171 984 164 877 336 860 173 931 155 380 329 311 -2%

Malaysia 152 978 131 794 284 772 150 123 130 685 280 808 -1%

Thailand 171 330 24 974 196 304 208 572 23 456 232 029 18%

USA 103 162 58 005 161 167 112 084 67 339 179 423 11%

New Zealand 53 355 67 571 120 926 60 727 70 850 131 577 9%

China 53 961 44 345 98 306 64 493 54 987 119 479 22%

South Africa 52 070 44 869 96 940 50 163 47 258 97 420 0%

India 41 272 29 573 70 845 44 612 32 023 76 636 8%

Hong Kong 43 716 30 334 74 049 45 623 30 432 76 055 3%

Philippines 30 781 18 851 49 632 38 619 20 857 59 476 20%

Japan 25 338 45 366 70 703 22 165 33 490 55 655 -21%

France 26 919 20 493 47 412 29 881 22 706 52 588 11%

Germany 15 700 33 301 49 000 17 758 34 602 52 359 7%

Italy 29 952 14 356 44 308 36 575 15 736 52 311 18%

Vietnam 40 670 7 611 48 280 45 068 6 143 51 211 6%

Ireland 10 024 23 245 33 269 14 731 34 526 49 257 48%

Canada 23 994 21 558 45 552 25 874 23 243 49 117 8%

UAE 13 388 13 082 26 471 15 930 12 990 28 920 9%

Other 202 903 173 641 376 544 226 898 196 743 423 641 13%

Total 2 057 344 1 229 776 3 287 119 2 230 385 1 273 992 3 504 377 6.6%

Top Markets to & from Perth

Source: DIAC

CAN is a logical connecting point for the below highlighted countries


13/1913

The Perth-UK market is ~400,000 pax with LHR 60% of the market

QF has the highest PER-LHR market share although EK has highest UKmarket share with a range of 1-stop options

LHR via DXB is ~1,100km shorter than via CAN

The market is very competitive with 9 airlines offering 1-stop services

Gaining market share will require good connections withcompetitive fares

Average fare of $1,159 equates to a yield of 8 US cents/km

16.5% of pax are in business or first class

Source: Department of Immigration and Citizenship (DIAC); AirportIS; Gcmap

London (LHR)

UK is the Second Largest Market from Perth

0

50100

150

200

250

300

350

400

450

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12

Pax

(000's)

History of PER-UK Market

QF

24%

SQ

22%

EK

21%

MH

12%

CX

9%

BA

5%BI

4% TG

2%

Other

1%

Market Share of Carriers for Perth - LHR


14/1914

EK

35%

SQ

20%

QF

12%

MH11%

AF

10%CX

4%

CZ

3%TG

2%

Other

3%

Market Share of Carriers for

Perth -Paris

EK largest market share twice daily PER-DXB connecting to twice daily CDG

CDG via DXB is ~1,300km shorter than via CAN

Market is not quite as competitive as LHR, but will still require goodconnections to compete with existing carriers

Total France pax 53k in FY12, an increase of 11% YOY; 8-year average growthrate of 13%; CDG 89% of total France market

Visitor arrivals for business up by 42% & arrivals for employment up by 59%(total France)

Average fare of $1,547 equates to a yield of 10.85 US cents/km which ishigher than LHR

Strong demand for premium seats: 23.5% of pax are in business or first classSource: Department of Immigration and Citizenship (DIAC); AirportIS; Gcmap

Paris (CDG)

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10

20

30

40

50

60


Pax

(000's

)

History of PER-France Market


15/1915

MH

27%

EK

23%

SQ

19%

KL

14%

QF

7%

CX

5% CZ

3%

Other2%

Market Share of Carriers for

Perth - AMS

MH has the largest market share MH PER-KUL-AMS as well as codeshares

with KLM

AMS via KUL is ~900km shorter than via CAN

25k pax in FY12 to the Netherlands, an increase of 12% YOY

65% of the Perth-Netherlands market are Visitors (Non-Residents)

60% of Visitor arrivals from the Netherlands are for holiday & VFR,

remainder for business or employment

Average fare of $1,239 equates to a yield of 8.75 US cents/km


Amsterdam (AMS)

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5

10

15

20

25

30


Pax

(000's)

History of PER-Netherlands Market


16/1916

QF

52%

VA

14%

NZ

11%

CZ

5%

UA

5%CX

3%

MH

3%EK

2%SQ

2%

DL

1%

Other2%

Airline Market Share for PER-LAX

Los Angeles (LAX)

Average growth of 8% from FY07 to FY12

Qantas dominates although market share has declined with increased

competition across the Pacific

Three quarters of traffic via east coast Australia this is the shortest route

LAX via SYD is ~2,400km shorter than via CAN

PER-LAX market grew by 9% in FY12 to ~68k pax

Australian residents 62% of the total USA market, helped by continued

strength of Australian Dollar

Perth-LAX has an average fare of $1,498 and strong yield of 10 cents US/km


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10

20

30

40

50

60

70

80

FY07 FY08 FY09 FY10 FY11 FY12

Pax

(000's)

History of WA-LAX Market


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10

20

30

40

50

60

70

80

90

100


Pax

(000's)

History of PER-Japan Market

Tokyo (NRT)Japan Market Likely to Recover

Source: Department of Immigration and Citizenship (DIAC)

SQ has the highest market share closely followed by CX both have good connections and

frequency

10th largest inbound market & 13th largest overall

51% NRT; 20% KIX; 14% HND; 6% NGO

Market 60% inbound visitors

High level of business travelJapan is Western Australias second largest trading partner

Average PER-NRT fare is $1,318 with a high yield of 16.65 US cents/km

Affected by natural disasters & cancellation of QF service May-11 Japan market now all indirect (via SIN & HKG) opportunity for good connections or to capture

market share & grow market

SQ

33%

CX

31%

QF

12% MH

8% GA5% D7

4%

TG

3%

Other

4%

Market Share of PER-Japan Pax by Airline

FY12 (DIAC)


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Seoul (ICN)

Source: Department of Immigration and Citizenship (DIAC) , PAPL analysis of FY12 AirportIS

CX has almost half of the market (46%) - good connections via HKG

Perth Korea market growth averaged 10% for last 5 years, including 9% growth in FY12

AirportIS shows 95% of pax going to ICN, 5% going to PUS

Immigration data shows 69% of traffic is Korean residents

Korea is Western Australias third largest trading partner

High level of business traffic with Korean companies investing billions of dollars in WA

ICN via CAN is a competitive distance compared to via SIN & HKG

Average fare is $979 with a strong yield of 12.61 US cents/km

0

5

10

15

20

25

30


Pax

(000's)

History of PER-Korea Market

CX

36%

SQ

18%

MH9%

QF

9%

D7

5%

KE

5% GA

5%

Other

13%

Market Share of Carriers for Western

Australia-Korea Market FY12 (DIAC)


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Overview of data sources used in this presentation

Source: PAPL Analysis

The Australian Department of Immigration and

Citizenship (DIAC) supplies data based on incoming

and outgoing passenger cards

Immigration data provides key fields such as the

Country of (Intended) Residence and the State of

(Intended) Residence in Australia

Immigration data provides country data only

and not city/airport data

IATAs AirportIS supplies data based on passenger

bookings made via travel agencies and also includes

some data provided by airlines

AirportIS provides city/airport data based on

airline tickets

AirportIS typically understates markets where thereis a large proportion of stopover traffic and for low

cost carriers

In this presentation, city information taken from

AirportIS has been grossed-up by the country

information from DIAC to better reflect the size of a

market

cz scheduling and market analysis 221112

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