Chinese carriers face severe challenges over African market expansion

Africa has been a dormant market for the Chinese airline industry since the loss-making China Southern’s Beijing-Dubai-Lagos route was suspended back in 2009 after the airline made a loss of CNY400m (US$64m). However a change in Chinese government policy now sees the implementation of a number of measures to break into the African market.
China Southern Airlines now operates a thrice weekly Guangzhou-Nairobi service, which means it is the only Chinese carrier to operating into Africa. This may soon change, however, as Air China announced plans earlier this year to operate on two new routes from Beijing to Addis Ababa and Beijing to Johannesburg in October this year. It is understood that China Southern is additionally scheduled to start a new service from Guangzhou to both Dubai and Cairo from June 2016.
As an indication of increased future investment in the African continent, last year Hainan Airlines parent HNA Group invested in Kenya’s cargo carrier Astral Airlines, saying that it also intends to announce a new African route in 2015 if all goes well.
The Chairman of China Southern, Si Xianmin, made a point of saying that the two Beijing policies, China-Africa Community of Destiny and China-Africa Regional Aviation Cooperation Plan, have created tremendous opportunities for domestic carriers to test the African market, which has massive potential. However, he also pointed out that “owing to traffic rights’ restriction and Africa’s scattered passenger sources, it’s difficult for domestic carriers to report profit on Africa routes. Thus we need to increase more traffic rights and rely on Nairobi that is the hub for SkyTeam as our main hub in Africa to attract more passengers from neighboring countries.”