TRANSLATION FOR NEWSWEEK SELECT
The CAAC and EACCA merger might put the chaotic Chinese air cargo market on track.
By Xi Yue (Beijing)
“It’s not alright to not merge. Merging, despite the possibility of producing many potential problems, will more likely create new opportunities,” says air transportation department head of China Civil Aviation University, Cao Yunchen, commenting on the recent merger announcement of China Airline’s Air China Cargo Co. Ltd. (CAACC) and Eastern Airline’s China Cargo Airlines Ltd. (EACCA). Currently, both companies are striving to set up the new company before the end of the year.
The new joint company will still be called Air China Cargo Airlines Ltd. (EACCA). Headquarters will be in Shanghai, and assets of the 50-50 venture will primarily come from fleets and crews of the two parent companies. After the merger, the new EACCA will become China’s largest air cargo company. However, many people in the industry are hardly overjoyed by the news and have created a mantra to express their displeasure: “Merging is seeking death, not merging is waiting for death.”
Ding Xingkang, assistant general manager of Shanghai Eastern Aviation Advertising Co. Ltd., says that the business performance of EACCA was pretty bad last year. The company had had no choice but to quickly consider a merger. Contributors to deficit were linked to the continued rising price of crude oil as well as big increases in fleet maintenance and repair costs. Both expenses rose by as much as 63.7 percent and 60.9 percent from the previous year. Additionally, the company’s 2005 annual report mentions several times that air cargo operators has been increasing within the Changjiang River Delta area, which had created more fierce competitions. As a result, the yield for ton-kilometer slid 2.12 percent compared to 2004.
CAACC’s situation wasn’t much different. Last year, all its Sino-US lines were in deficit. Even though the company’s cargo gain witnessed a rise of two pecent, reaching $0.25 per ton-kilometer, operation costs also rose to $0.35 per ton-kilometer. According to the data on CAACC website, the company’s average oil purchasing price in 2005 increased by more than $100 per ton, compared to the year before. Although appreciation of oil hit all transport companies hard, the impact, to the already deficit-burdened CAACC and EACCA, proved especially devastating.
“It’s because when they fly half their cargo space is empty,” says an air freight cargo staff with the Shanghai branch of Cathay Pacific. “
The most important element of an air freight transport business is the rate of transport. How can an empty plane make any money?” He says Cathay’s average cargo transport rate was 67 percent last year, Singapore Airlines at 63.6 percent and Korean Airlines at 74 percent, while CAACC and EACCA only reached rates of 54.5 percent and 53.35 percent. In this industry, those 10 percentage points stand as the watershed between profit and loss. Based on the break-even point of 65.97 percent of EACCA, the company’s 770,000 ton cargo performance was short by over 100,000 tons.
Cao Yunchun of China Civil Aviation University says there are many ways to increase cargo transport rate: optimizing flight line structure, finetuning sales network and raise the quality of service. All these things help to the goal, but the premise of implementing these procedures must be to create a realistically scaled stronger structure upon which to build. The merger of the two companies is a reasonable decision. Cao points out that if one looks at the two companies as individual entities, their limited fleets are difficult to appreciate their individual importance or superiority in the aviation freight transport industry. And they are hard to implement the operation model of subcontractors. Only by combining the companies in a merger, they are possible to optimize their fleets and routes, as well as resource sharing, and create volume scale benefits.
AMT Consulting’s senior advisor Zhao Yang also points us: “Air cargo transportation is selling loading capacity and cabin placement, but that doesn’t mean selling out cabin space. Good services and optimal routes are invincible tools to an air cargo company.” In addition, the number of air crafts is a also deciding factor. Currently, EACCA has six MP-11 cargo planes converted from passenger planes from Eastern Airlines and one rented 747-200, and CAACC has nine Boeing cargo 747Fs.
But even adding the two 747-400 cargo planes that Eastern Airlines plans to buy in these two years, the fleet of the new joint-company still can’t match the magnates in the air cargo freight industry. For example, Korean Airlines, a continuous two-year champion of air cargo freight worldwide, has 19 747 cargo planes. Cathay Pacific, a mutual stockholder with China Airline, has 14 747s. However, Cao believes that the scale of their fleet after the merger “is at least be qualified to stand on the starting line. Moreover, CAACC’s advantage lies with its routes to the Americas, and EACCA’s with the Changjiang River Delta. Restructuring fleets and routes of both companies should achieve sharing of resources and bring forth the benefit of a volume scale operation.”
Lufthansa Cargo AG’s director of corporate communications in Frankfurt headquarter, Niles Haupt agrees, “China’s import export business is at disequilibrium. This would be a challenge for any airline company. The merger will be advantageous for the two companies to compete globally, and make things easy for them.” Furthermore, as China has started to carry out its promised “open sky” policy while joining the WTO, the two companies have no choice but to merge. Even other Chinese airline companies who has been enjoying a privilege status, they must reform accordingly under the huge influx of foreign investments. Otherwise, this market will be completely carved up by foreign investors.
Over the past five years, China has already signed new bilateral aviation transport agreements and aviation rights arrangements with 42 countries. FedEx, UPS, DHL and other major shipping companies have already entered the Chinese market. Additionally, Great Wall Airlines, Shanghai Air Cargo International and Jade Cargo International, which Lufthansa Cargo occupies a 25 percent share, are all in business or will be in business soon. Cao says today’s China air cargo market has entered into
a “warring states period.”
Zou Jianjun, associate professor at the Civil Aviation Management Institute of China says the merger between CAACC and EACCA is one of both risk and opportunity. Challenges brought by the new company for management on all levels include questions of how to merge the different cultures of a northern and southern company, how to coordinate two distinct management styles bilaterally, and, after the merger is complete, how to manage the sudden increase of airplanes. Zou says merging is just the first step to meeting the competition, “Both sides of the merger should have a clear long-term plan for what’s ahead. If change is only on the scale of fleets and if traditional restrictions and problems involving marketing and transportation networks are not solved, then the disparity between the new company and those international-level opponents will never be overcome. Even worse, the company could fall into even greater difficulties due to scale expansion.” Zhao Yang of AMT Consulting agrees that the new-joint company, after merging, should immediately consider how to optimize business structure and find out how to make use of the optimized routes to develop high value-added cargo services.
“Although the shipping market is a big piece of cake,” says Zhou, “Chinese companies have never been able to enjoy the most delicious part of it up until now.”
A poor service level and sluggish sales and transport networks are the biggest reasons for the tasty bits being sealed off. Mr. Li of Korean Air’s Beijing office points out that while CAACC still use the phone to locate current position of cargoes, the company and a few other international players have been using networks that virtually cover all parts of the world to provide customer information such as cargo placements, locations, and arrival times. They can even truck the client’s items to desired locations. Chinese airline companies must make substantial change in order to jump out from the low-end market.
As Haupt of Lufthansa says, it is premature at this time to talk about whether the new EACCA will become a threat to big cargo players like his company. However, the merger between CAACC and EACCA is very possibly to open a whole new sky for Chinese air cargo industry.
不一样的天空
混乱的中国航空货运市场或会因国货航和中货航的合并而走向规律。
“不合肯定不行。合，虽然可能会产生很多问题，但更可能找到机遇。”这是中国民航学院航空运输系主任曹允春，对最近国航旗下的中国国际货运有限公司（国货航）与东航旗下的中国货运航空有限公司（中货航）宣布合并后的看法。目前这两家公司正在争取于年底前把新的公司成立出来。名称将仍用中国货运航空有限公司。新的中国货运航空的总部设在上海，资产将主要来自原两家公司的机队和飞行人员。原两家航空公司将各持新公司50％的股份。合并后，新的中货航将成为中国第一大的航空运输企业。但业内人士对这个消息却没有多少喝彩，甚至出现“合并是找死，不合并是等死” 的悲观评论。
东航传媒有限公司副总裁丁新康表示，中货航去年的营运业绩亏损相当严重，中货航因而不得不尽快考虑合并事宜。亏损原因与原油价格不断上涨,以及公司机队维修成本大幅提高有关。两项支出在2005年分别比前一年上涨了63.7％及60.9％。另外，该公司的2005年度报告中也多次提到，长江三角地区的货运业者不断增加，市场竞争日益激烈，导致全年货邮运输的吨公里收益率比2004年下降了2.12％。
国货航的情况也差不多，去年其主攻的中美航线全以亏损告终。尽管货邮收益较前一年提高了2％，达到0.25美元/吨公里，然而经营成本也同样上升至0.35美元/吨公里。据国货航网站的数据显示，该公司2005年的燃油平均采购价，每吨比前一年上涨了100多美元。虽然燃油涨价对所有航空公司都产生压力，但这压力对亏损中的国货航和中货航却影响更甚。
“因为他们的飞机在空中飞的时候，有一半的货仓是空的。”国泰航空公司上海货运部一名工作人员这样说。“货运业最重要的是载运率。空飞机怎么赚钱？”他表示国泰航空去年的货邮平均载运率为67％，新加坡航空为63.6％, 大韩航空为74％，而国货航和中货航则只有54.5％和53.35％。十多个百分点的差距，就是盈利和亏损的分水岭。以中货航65.97％的收支平衡载运率来算，中货航去年77万吨货邮的载运量，距离收支平衡共差上10多万吨货物。
曹允春表示，要提高载运率的方法很多：优化航线结构、健全销售网络、提高服务水平，这些都有助达到目标，但前提必需是建立在一个规模的基础之上。故两航合并的选择还是合理的。他指出，把这两家公司分开来看，他们的机队规模小，很难形成航空货运的中枢航线网络优势，和达到采用分包中心运作的经营模式。只有把两家公司合并，才能重组优化机队和航线，做到资源互补，产生规模效应。
AMT研究中心高级咨询顾问赵杨也说：“航空运输卖的是运力和舱位，但又不等同于出卖舱位。良好的服务配合优化的航线结构，才是航空公司战无不胜的利器。”另外，飞机的数量也是一项重要的决定性要素。目前，中货航有6架从东航购置的客改货MD-11货机及1架租赁的747-200货机，国货航则有9架波音747F全货机，即使加上东航今明两年准备共引入的2架747-400全货机，新公司机队在运载能力上仍无法和真正的货运巨头们匹敌。例如，曾连续两年蝉联世界商业航空运输第一位的大韩航空公司便有19架747货机，而与国航相互持股的国泰航空也有14架747货机。不过曹允春认为，合并后机队的规模“起码算是站到了起跑线上。而且国货航的优势在于美洲航线，中货航的优势在于长江三角，将两家机队和航线优化重组，可实现资源互补，产生规模效应。”
汉莎航空公司法兰克福总部的公关总监尼尔斯．豪普特也同意：“中国贸易进出口太不平衡，对任何航空公司来说都是一种挑战。这样的合并对于两家公司日后参与国际竞争是有利的，规模和航线过少会失去竞争力。这样的整合会令事情简单得多。”再者，随着中国开始履行加入世贸所承诺的“天空开放”政策，两家公司也不得不合并，即使是其他养尊处优的中国航空公司，他们在大量外资涌入的情势下也必须做出改变，否则这个市场将可能完全被外资所瓜分。
过去五年间，中国已经与42个国家签署了新的双边航空运输协定或航权安排。诸如联邦快递、UPS、DHL等航运巨头已经进入了中国市场，另外，长城航空、上海国际货运航空，及汉莎航空占25％股份的翡翠国际货运航空等公司也已进入运营或在积极筹建中。曹允春认为，今天的中国航空货运市场已经出现了“春秋战国”的群雄割据局面。
中国民航管理干部学院经管系副教授邹建军表示，中货航和国货航的合并是风险与机遇并存的。如何融合南北两家公司的文化，如何协调双方管理模式的差异，以及合并以后，如何管理陡然增加的飞机数量，这些问题对新公司未来的管理层都是一项挑战。邹建军说合并是迎接竞争的第一步，但也仅仅是个开始，“合并双方应该有个明确的规划，如果改变的仅仅是机队的规模，而传统制约航空货运公司发展的市场营销网络与运输网络等问题没有解决，则新公司仍然会与国际对手存在大的差距，甚至可能陷入因规模扩大而引起的种种困扰。”AMT研究院的赵杨也同意，两航合并后的新公司应该在成立之初，即考虑如何优化营运结构，和想出如何利用优化的航线来开发高附加值的货运服务。
邹建军指出：“虽然中国的航空运输市场是一块大蛋糕，但中国公司一向以来都只能吃品质差的那一部分。”主要原因乃是他们的服务水平、销售及运输网络滞后所致。中货航在亚洲的主要竞争对手大韩航空北京办事处的李先生指出，当国航仍以电话来查询货物当前的位置时，大韩和其他一些国际货运公司，已经直接通过几乎覆盖了世界上任何地方的网络，去找出从定舱、货物定位、到达时间等一系列的信息。他们甚至能为客户提供与卡车紧密接轨的服务。中国的航空公司要跳出低端市场，他们必须作出果断的改变。
正如汉莎航空的豪普特所认为，现在去谈合并后的中货航会否对像他们般的货运巨头造成威胁，目前尚言之过早。不过，国货航和中货航这次的合并，很可能为中国的航空货运业打开一片不一样的天空。
邹建军 中国民航管理干部学院经管系副教授
Zou Jianjun Associate Professor, Civil Aviation Management Institute of China
电话：010-58250580
赵杨 AMT研究中心高级咨询顾问
Zhao Yang AMT Consulting
电话：010-65305956
传真：010-65305976
手机 Mobile: 13910877273
地址：北京市朝阳区建国路89号华贸中心16号楼0315室（100025）
曹允春 中国民航学院管理学院航空运输系
Cao Yunchun Professor, Civil Aviation University of China
电话: 022-24092123
手机：13821376260
尼尔斯．豪普特 汉莎航空公关总监
Nils Haupt Director of Corporate Communications, Lufthansa
Lufthansa Cargo AG
FRA F/CI
Gate 25, Building 451
D - 60546 Frankfurt am Main
Telefon: +49-69-69691123
Telefax: +49-69-69691185
nils.haupt@dlh.de
www.lufthansa-cargo.com
丁新康
中国东方航空传媒有限公司的副总经理
Ding Xinkang
Shanghai Eastern Aviation Advertising Company Limited
上海中山西路2366号200343
郗岳 Xi Yue
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