Shenzhen's Seagull: Donghai Airlines Takes Flight

Shenzhen is one of the largest, most prosperous and competitive cities in all of China. Most new airline startups are joint ventures with State governments eager to grow the low levels of air travel in their region but that is not the case with Donghai Airlines. Formerly an all cargo airline it launched passenger services in March 2014 from the busy and architecturally impressive new Shenzhen Bao'an International Airport.

In 2010 Shenzhen was the 4th busiest airport in China and the 2013 opening of a huge new replacement terminal has only enabled further growth with nearly 40 million passengers using the facility in 2015. It is also the home of Shenzhen Airlines (the 4th largest airline China by fleet size) which has a 28.2% share of seat capacity as of February 2016 whilst China Southern has a further 23.8%. From the outside this makes it somewhat of a surprise that a new private passenger airline would begin operations from Shenzhen

Donghai Airlines Boeing 737-800 B-5313 Panda Models

Donghai Airlines was originally formed in November 2002 as Jetwin Cargo Airlines but operations did not begin until the end of 2006 following delivery of three freighter converted Boeing 737-300s. In 2010 a business jet service was begun by the affiliated Donghai Jet Co using Bombardier Challengers but in December 2013 the airline received permission from the CAAC to commence passenger services. Despite Shenzhen's competitive market and slot restrictions at the airport the city is a prosperous one and a sought after destination. In fact low cost Spring Airlines was also looking at creating a hub at the airport. Instead Donghai Airlines became the first privately owned airline to be based at Shenzhen though unlike Spring it is a full service airline.

Passenger services began in March 2014 with a single 737-800 leased from ILFC painted into its attractive blue scheme with nine coloure seagull on the tail. A second ILFC leased aircraft quickly arrived and by May the airline was operating daily services on the Shenzhen-Ningbo-Dalian and Shenzhen-Harbin-Hailar routes. The first route was in competition with multiple airlines to each of the cities and in fact only on the Shenzhen-Hailar and Harbin-Hailar sectors is there no competition. At the time operations began Donghai Airlines Chief Executive Officer Guoxin Su, previously General Manger of China Eastern Airlines (Jiangsu), said:

"We have established a seven-year blueprint. For the next two years, we plan to add five to six aircraft to our fleet each year. By 2020, Donghai will have developed on an extraordinary path,”

This growth was facilitated by a 25 plane order for 737s constituting 10 737-800s and 15 737-800 MAXs. The plan itself ambitiously includes increasing the fleet to 50 aircraft (a mixture of 737s and even 787s) by 2020 and has plans for an IPO in May 2016. In September 2015 these initial expansion plans had been dwarfed with a planned fleet of 120 aircraft by 2025.

Route growth at Donghai has included further routes from Shenzhen like:

• Shenzhen-Nantong
  
• Shenzhen-Yantai
• Shenzhen-Nanjing-Changchun
• Shenzhen-Haikou
• Shenzhen-Shenyang
• Shenzhen-Kunming
• Shenzhen-Hangzhou

All of these were operating by the end of 2014 a year in which the airline transported 330,000 passengers with its 3 737-800s. Further major trunk routes have been opened including Shenzhen-Shanghai Pudong on April 2015. In September 2015 the airline received its 7th 737-800 and it has opened a secondary base from Haikou on routes like Haikou-Qnazhou-Wuxi and Haikou-Changsha-Lanzhou. By August 2015 the airline was transporting 90,000 per month and by the end of the year the fleet stood at 9 737-800s. In 2016 Donghai Airlines is to add 6 further aircraft and recently announced it would base four at Zhengzhou. It already operates a Shenzhen-Zhengzhou-Urumqi service.

Donghai's growth doesn't look likely to stop. In 2015 it experienced 261.6% growth transporting 150,800 passengers in December alone and 946,100 overall for the year. Whether Donghai can continue to expand at the rate it has, and meet its aims of serving Africa and the Americas only time will tell but so far the seagulls of Donghai have been successfully meeting the challenges of operating from competitive Shenzhen and spreading their wings to other smaller airports in the South-west from which it can grow to compete more fully with the majors.

References

2014, March 27. ILFC Leases Boeing 737-800s to Donghai Airlines. Business Wire
2014, May. China's new airlines – Donghai, Loong & Qingdao – preferring to follow rather than innovate. CAPA
2016, February. Air China's Melbourne-Shenzhen route application an example of China's network fragmentation. CAPA