Hainan Goes Intercontinental Pt2: North American 787s

Hainan Airlines started its first route across the Pacific in June 2008 with its inaugural service connecting Beijing with Seattle. Initially this service was flown by A330-200s as Hainan's 787s were still more than 5 years away. Since then Hainan has striven to expand across the Pacific, not always successfully, but now operates seven routes with a lot more likely within the next 5 years.

Hainan acquired longer-legged aircraft in August 2008 when the first of three ex-Cathay Pacific Airbus A340-600s were leased from ILFC. The A340s initially operated domestic trunk routes and some of the airline's longer international sectors to places like Moscow and it wasn't until November 27, 2010 that it opened services to Hainan's second North American gateway - Toronto. The A340s would become common visitors to Canada but were only ever stopgaps - albeit quite long ones due to the 787 delays. The last A340 service operated on July 15, 2014 by which time the 787s were finally ready.

Hainan's first 787-8, B-2722, wasn’t delivered until July 2013 but 11 months later in June 2014 there were  eight in service. The last of the ten, B-2759, was delivered in March 2015. The aircraft's registrations are very out of sequence. Despite the extremely long delays with the type the 787s arrived at a good time as visa liberalisation and growing interest has seen travel between China and North America expand impressively in the past few years. Hainan's third North American destination was Chicago (begun in 2013) and both this and Toronto quickly became 787 services. By June 2014 Hainan had built itself a 5% share of the China-North America market and there has been plenty of growth after that.

On June 20, 2014 Beijing-Boston was begun, again with 787s, making Hainan the only Chinese and only the second Asian airline at the city. The 787 has proven perfect for Hainan's intercontinetal aims providing a combination of medium capacity and long range great for starting new thinner routes. This si especially important given the one-airline, one-route policy of the Chinese government which favours Air China for the more lucrative high capacity routes. By June 2014 North America comprised 27% of the airline's international seat capacity. Beijing's geographic position also has favoured Hainan's North American expansion.

As 2014 drew to a close Hainan optimistically requested approval to serve 9 new routes including 5 in North America. In particular Hainan had for many years been trying to get permission to operate to New York from Beijing in competition with Air China. This was reportedly granted if Hainan would start services to Africa which China puts strategic importance upon but which would not be profitable, however as of yet the route has not been begun. Regardless it was clear as 2014 closed that Hainan did not have enough aircraft to meet its ambitions so it was not a major surprise for it to order more 787s in March 2015. Having said that the order for 30 787-9s means that the airline has more long-haul aircraft on order than it actually operates at present!

Over the summer of 2015 Hainan's North American share of its international capacity increased to 38%. Its 787 fleet is heavily used on international services with 88% of its ASKs being international. This high utilisation has allowed the 767s to be moved primarily to domestic routes (making up 61% of their ASKs) whilst the A330s operate between 55-65% of their flights internationally.

Hainan has continued to add new destinations across the Pacific and as of July 2015 serves daily routes from Beijing to Boston, Chicago and Toronto with the 787, plus daily Beijing-Seattle with A330s. In addition new destinations now include a five times weekly service from Beijing to San Jose with 787s and new services from Shanghai. The latter are made up of a three times weekly Boston 787 and a four times weekly Seattle A330.

Even with this growth it is clear that with such a huge 787 order some of the constraints that have been put on Hainan Airlines' expansion must be removed. As it is the carrier has increased its size in the Pacific by 50% over 2014 but with 30 extra 787s there is surely much new growth to come.

References

2014 Jun. Hainan Airlines builds compact North American 787 network. Now for Beijing to allow momentous growth. CAPA
2014 Oct. Hainan Airlines eyes ambitious 2015 with wishlist for nine new long-haul routes. CAPA
2015 Mar. Hainan Airlines order for 30 787-9s underscores trans-pac growth. Partnerships will need to increase. CAPA