Private In China Pt4: Kunming's Ruili Airlines

The first wave of Chinese private airlines were not an overwhelming success with most failing or falling under the ownership of the big four Chinese airline groupings. The CAAC announced a moratorium on new airline licenses from 2010 but as airport capacity issues have eased and the concept of low cost airlines in China has gained official backing the CAAC has begun to issue new licenses. One of the first of the new breed of private airline to start operations is Ruili Airlines based at the popular city of Kunming.

Ruili Airlines is owned 100% by the Yunnan Jingcheng Group however in keeping with many of the new breed of startups has attempted to avoid one of the primary bottlenecks facing new airlines - personnel shortages. Ruili has enlisted China Eastern Yunnan Airlines to provide management experience and Sichuan Airlines for technical help. The airline's license was approved by the CAAC in May 2013 but as is common for new airlines it has taken a while to get into the air.

Ruili Airlines was able to take advantage of the CAAC's new found willingness to let airlines deal directly with manufacturers to sign a purchase agreement with Boeing for 14 Boeing 737NGs (eight series 700s and six series 800s) as early as August 2013. A deal was also done with Air Berlin to purchase a pair of their 737-700s as the airline's initial equipment and this was added to in 2014 by the purchase of a pair of their series 800s also.

Operations began on May 18 2014 using the two ex-Air Berlin 737s. B-5811 was delivered to Air Berlin on December 21, 2010 as D-ABLE. Ruili received its first new build aircraft on November 22, 2014. At the present time the fleet consists of four 737-700s and a single 737-800 however the airline has plans for 24 737s by 2020. Operationally the airline has taken the safe route of becoming a full service carrier (albeit light on frills), which is the standard model in China. Chinese consumers have as yet proven uncertain of the low cost model however the future potential in this area is huge.

Kunming is a city with a quickly growing aviation market. In June 2012 the previous Wuijaba International Airport was replaced by Changshui International which with two runways is expected to handle up to 38 million passengers by 2020. The airport is already a hub for China Eastern Yunnan Airlines, Kunming Airlines (owned by Air China) and one of Hainan Airlines affiliates (Lucky Air) so Ruili is facing a lot of competition. As of March 2015 China Eastern Yunnan has a 42% market-share at the airport with Lucky Air on 12% and China Southern on 10.5%. Air China and Shenzhen have a 7% share and Kunming another 5%. Ruili is not presently in the top 10 airlines at the city. With Lucky Air beginning to transition to a low-cost model it appears Ruili may also be forced down this path to stay viable and differentiate itself from other airlines. At present it operates from Kunming to cities like Wuhan, Jinan, Mangshi, Nanning, Wenzhou, Nanchang, Beihai and Xian.

References
2014 November. CAPA. China's 19 new passenger airlines will be mostly full service and along the east coast
2015 March. CAPA. China's Lucky Air hopes for greater fortune with LCC model. 70 aircraft and widebodies by 2020