Spring Airlines bucks industry trend with 10% profit growth

Spring Airlines staff pose in front of an A320 in Tianjin to mark the receipt of the airline's first purchase of the model from Airbus, March 10, 2010. (Photo/Xinhua)

 At a time when most airlines have seen profit declines due to restricted business flight demand, Spring Airlines, China's only budget airline, reversed the downtrend to see profit growth of around 10% last year, Shanghai-based China Business News reports.

In 2013, total profits in China's airline industry reached 27.3 billion yuan (US$4.5 billion), down 7.7% from 29.6 billion yuan (US$4.9 billion) a year earlier, while Spring Airlines, which owns 40 aircraft, enjoyed a profit growth of about 10%.
In 2013, amid slowing economic growth and the government's anti-corruption campaign, which restricts business trips, the nation's airlines, which had seen prosperous profit growth in the past, suffered profit declines.

Spring Airlines, headquartered in Shanghai, is the aviation subsidiary of Shanghai Spring International Travel Service. It is China's only no-frills airline.

The rising restrictions on business trips and, consequently, business flights, has given new opportunities for Spring Airlines. "The passenger volume of China's market is still growing, and more and more clients are choosing low-cost budget airlines," said Spring Airlines spokesman Zhang Wuan.

Zhang said that more and more of Hebei's government officials have chosen Spring Airlines when taking either business trips or private trips, while among the airline's customers, about 75% are young adults aged under 30.

Spring Airlines has offered ticket prices about 36% lower than other airlines, giving them a higher seat occupancy rate, standing at around 95% on average, which has helped boost the airline's profits.

Spring Airlines has gone to great lengths to reduce costs, in an effort led by its chairman Wang Zhenghua.
The airline has been actively exploring new markets, setting up international routes to Southeast Asia in 2013, and cutting routes if they are not profitable after a certain period of time.

Zhang said the airline now relies on business tourists and private tour clients, while group travel clients account for less than 15% of passengers.
Spring Airlines is facing more and more competition, however, as several traditional airlines such as Hainan Airlines and China Eastern Airlines have made moves to set up budget airline divisions or are studying the feasibility of a move into the market.
Budget airlines have expanded in other countries much faster than in China. The Philippines, for example, has seen its budget airlines taking more than 80% of its domestic airline market, while Thailand is expected to increase its budget airlines market share to more than 50% within three to five years.
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