In the China Eastern Airline's 2012 Annual Report Chairman Liu Shaoyong discusses the company's focuses from 2012 and also looks towards the future.
 |
| Chairman Liu Shaoyong |
Global Downturn
China Eastern Airlines Chairman Liu Shaoyong outlined three issues associated with the economic downturn that affected his company. They are:
- Decreased demand in both international and domestic passenger traffic and freight markets
- Greater cost pressures brought by consistently high crude oil prices
- Intensified competition in domestic routes due to preference of passengers for railway over airline transportation.
It only seems natural that an
airline would suffer from decreased demand in passenger traffic during an
economic downturn as people try to save money. It also comes as no surprise
that high crude oil prices prove an issue for an airline company where the use
of large amounts of fuel are unavoidable but it is interesting that people have
left airline travel over a preference to travel by railway. Why would this be
so?? My initial train of thought (no pun intended!) led me to compare rail and
air travel in Australia where flights are relatively cheap and available in most
areas and appear to be much quicker than by train. Of course this is in
Australia. But why does China prefer rail travel over air? Is it due to cost? Or
Comfort? Or is rail travel perhaps more accessible for people?
Safety Focus
It is also good to see that the
Chairman has outlined the company’s efforts to increase safety standards at
China Eastern Airline. The Chairman outlined the following as ways in which the
airline had been focusing on safety:
- The Group continued to strengthen its construction of the Safety Management System
- Commenced specific restoring measures regarding the risks such as lightning strike, hard landing and communication failure
- Established Nantong airport training base to reinforce training on flying skills
- Formulated the Assessment and Remuneration Packages of Star-Rating Flight Crew Members which commenced star-rating assessment of all flight crew members in terms of flight safety, flight quality, practice and discipline and services.
The Star-Rating process is quite
interesting and something that seems like a great Idea. It almost reminds me of
my car insurer where discounts are offered for training completions, track
record etc. except pilots are being rewarded with an increase in pay for their
safety record.
Information Technology
Another topic of interest is
China Eastern Airline’s development of information technologies. With an
optimisation of electronic sales service systems, its website, call centres and
mobile application which allows customers to book tickets, check flight
statuses and carry out online check in. Using technology to improve the
customer experience is a great idea!
Looking Forward
Liu Shaoyong also speaks about
looking forward towards 2013. He starts off by throwing caution to the wind
stating that the operations of China Eastern Air are closely linked to
political and economic developments both domestically and internationally. He
also cautions that no undue reliance is put on any statements about the future.
Besides this looking like an attempt to avoid blame should a future development
go bad, it is interesting to note the mention of political and economic
developments as impacting the company. Obviously this makes sense but does
highlight the affect that outside influences have on a business, that is, a
business cannot continue to prosper if they ignore outside influences!
Looking forward China Eastern
Airline seeks to increase efficiency of their passenger traffic business by
ensuring the allocation of flight capacity and routes is precise. They also aim
to restructure their freight fleet and route network to better meet the
existing market conditions which appears to show a decrease in demand for air
freight. Shaoyong also highlights cost controlling citing things such as
reduced fuel consumption through route optimisation and weight reduction and
reducing financing costs. I believe that the reduction in fuel consumption
would not only reduce the costs of doing business would also be part of the company’s
corporate social responsibility, after all the company is heavily reliant on
fuel consumption and would go through an enormous quantity each year.
No comments:
Post a Comment