Newsstand - Air China to join * , ordering A 380 ?

BEIJING (AFX) - Air China (Nachrichten) has agreed to join the Star Alliance, a tie-up of 18 airlines including Deutsche Lufthansa AG and Singapore Airlines, and is expected to sign an agreement joining the group when German Chancellor Angela Merkel visits Beijing next Monday, sources said.

http://www.finanznachrichten.de/nachrichten-2006-05/artikel-6451269.asp

Question is whether they sign an order for the A 380 when Merkel visits China or if they sign it sometime later...

Well China is expected to need some 200 747/A380-size aircraft so perhaps Air China will join China Southern as an A380 operator.

On the other hand, China like to "balance" things and Air China currently operates 4 Boeing 747-400s so the government might decide to buy some 747-8s.

The more interesting thing to watch is the relationship between Air China and Cathay Pacific.

Currently, Cathay owns 10% of Air China and 17.8% of Dragonair. CITIC, the Beijing-controlled investment arm owns 25.4% of Cathay and is considering selling its 28.5% of Dragonair to Cathay. Swire owns 45% of Cathay and 7.7% of Dragonair.

Just one week ago, analysts are saying the upcoming change will strengthen the ties among the three airlines. I don't see how. I think it's a weakening of the ties between Cathay and Air China. Dragonair can finally become more like a subsidiary or CX and join oneworld.

Or maybe I just understand it all wrong

Well China is expected to need some 200 747/A380-size aircraft so perhaps Air China will join China Southern as an A380 operator.

On the other hand, China like to "balance" things and Air China currently operates 4 Boeing 747-400s so the government might decide to buy some 747-8s.

If any of them are going on internal routes you can bet it'll be the high density layouts regardless of which aircraft it is. :eek:

If any of them are going on internal routes you can bet it'll be the high density layouts regardless of which aircraft it is. :eek:

The trick is, the A380 is not designed for high-density short-haul operations. And Airbus has never shown willingness to work on modifying their planes to meet that spec.

So as much as people like to say JL and NH buy Boeing thanks to MITI forcing them to, the fact is JL and NH are offered two choices to fill the need for a high-density, high-cycle, short-range mission profile:

A high-capacity, low-cycle, long-range plane that has been modified for high-capacity, high-cycle short-range use; or
A high-capacity, low-cycle, long-range plane

I think most rational people with a modicum of common sense would concede that the prudent choice in such a situation is #1.

Now, sometimes even rational people with a modicum of common sense can come to the conclusion #2 is the prudent choice, as SQ has done with ordering the 772ER vs. the 772A, but SQ's equation had a few more variables in it, as well (like desire to be able to use one plane on both short-range and long-range missions).

So China may decide that an all-Economy 800-pax A380 that can do PVG-BEJ as well as PVG/BEJ-SYD is the right choice, operating under the assumption that any premium fare traffic to/from SYD will not take this flight. But if, instead, China does not want to launch all-Economy international regional service, then the A380 will not be a realisticoption for them.

However, there is nothing preventing China from using a 500-seat A380 between PVG and BEJ while also using it on international runs, since the government may decide that high-CASM doesn't matter since they can always compensate the airline's directly for their losses.