Wang Junjin as a Deputy to the fourth session of the 12th CPPCC NPC for Political Deliberation

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JuneYao Airlines: Fleet size will double, the option of joining airline alliance is under consideration
ReleaseDate: 2016-03-15

 Match 14, 2016   www.carnoc.com   Li Xiaoyan

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According to Bloomberg report, on March 13, Chairman of JuneYao Airlines Wang Junjin said, by 2020 the company’s fleet size will double, it is expected the Shanghai Disneyland scheduled to open in mid 2016 and growing number of tourists will further boost the demand for air travel. This airline company is now considering whether or not to join a global airline alliance.

During the NPC informal meeting period, Wang Junjin said: “There is huge growth potential. China has a population of 1.3 billion, but last year there were only 400 million person times of flight passengers.”

Wang Junjin said, since November 2015, JuneYao Airlines keeps the title of the most punctual airline in China. The company expects to expand the fleet size from the existing 50 aircrafts to 100. Furthermore, JuneYao Airlines has negotiated with some airline alliances, and will decide whether or not to join one of them by the end of this year.

As China changed its economic policy, the government is building a great number of airports to boost growing demand of the swelling middle class for air travel. According to data from CAAC, in 2015 China’s air passenger turnover grew by 11.4% to reach 440 million person times. CAAC authority estimates that air passenger turnover in 2016 will reach 485 million person times, private airline companies have made full preparations to grab market share with flexible management and efficient cost foundation.

Favored by the market, share price soared

Since listing on May 27, 2015, share price of JuneYao Airlines soared, and nearly tripled; the share price of Spring Airlines which was listed in January 2015 also kept rising, growing by over 360%.

According to Bloomberg’s data, among airline companies in Mainland China, JuneYao Airlines has 23.6% return on equity, only next to 28.1% of Spring Airlines, the two airline companies beat most full-service airline companies and low-cost rivals in Asia Pacific region. Among China’s three state-owned airline enterprises, China Eastern Airlines has the highest return on equity of 12.5%, Hainan Airlines, the the fourth biggest airline company in China, has a return on equity of 9.3%.

Wang Junjin said, in the first two months of 2016 JuneYao Airlines’ revenue grew by 40% on Y-o-Y basis. This is closely associated with its strong performance in the past three years. According to Bloomberg’s data, JuneYao Airlines’ passenger revenue grew by nearly 88%, whereas Spring Airlines’ passenger revenue grew by 60%.

Adding flights to Russia and Thailand, tapping mid to short distance international flight routes

Wang Junjin said the company expects to receive the delivery of 10 aircrafts in 2016, most of them are narrow-body aircraft Airbus A321, since JuneYao Airlines plans to add flights to Thailand and Russia. Domestically speaking, he expects the demand brought by Shanghai Disneyland will develop some new flight routes.

JuneYao Airlines previously published report, pointing out that due to low oil price, high growth rate of air travel market and the company’s increasing operation efficiency, compared with 427.7 million yuan (USD 65.90 million) revenue in 2014, in 2015 its net revenue may increase by as much as 160%. This airline company will publish financial report in April as scheduled.

Wang Junjin said it is expected the subsidiary Jiuyuan Airlines will break even in 2016, and may earn profit in 2017. Jiuyuan Airlines may start to operate international flights in the second half of 2016, Southeast Asia is the most likely destination. He said: “International flights of China Southern Airlines are mostly long distance flights, we now hope to tap destinations in shorter distances.”