Nairobi link a big step for China Southern

China Southern Airlines' recent launch of a direct air service to Nairobi marked its first route to Africa from its main hub, Guangzhou. It is seen as a catalyst to boost the growth of trade and tourism between China and Kenya.

Air transportation plays a vital role in a nation's growth by accelerating the convergence of goods and people, and contributes directly with spillover effects through creation of direct and indirect jobs in the industry and related sectors such as tourism and other services. How will China Southern's direct air service benefit China and Africa, and the airline as well?

First, the direct services will further strengthen bilateral relations between China and Kenya and Africa on a whole. The more frequent services will facilitate bilateral trade, which is valued in excess of $220 billion. It will also engage the countries in the global economy by increasing access to each other's markets and allowing globalization of production. Kenya is regarded as the regional hub for trade and finance and a gateway to central Africa. The country is expected to benefit from China's Belt and Road Initiative, playing a pivotal role in facilitating Chinese businesses to penetrate and expand in the region.

Next, aviation is indispensable for tourism, which is a major engine of economic growth, particularly in developing economies. China and Africa are expected to be the fastest-growing air transport markets over the next three decades. China is forecast to overtake the United States as the world's largest passenger market by 2030, and Africa is expected to grow by 4.7 percent annually, seeing an extra 177 million passengers a year for a total market of 294 million passengers. Some 32,000 Chinese visited Kenya and 3 million visited Africa in 2014, while Kenya could see more than 100,000 Chinese arrivals in 2016.

Connectivity, convenience and shorter flight duration are some of the key decisive factors affecting international passengers' choice of airline. China Southern's direct services will significantly improve the accessibility and connectivity between the two markets by reducing the flight to just over 11 hours. Travelers can fly directly without the hassle of additional stops or connections. The carrier will also improve its efficiency by reducing operational costs such as fuel and labor.

Airlines are both a national and an international business. They need an extensive domestic and international route network to retain sustainability and a competitive edge. Its international route network and structure to a great extent determines its competitiveness in the global market. Compared with airlines such as Air China, Emirates, Korean Air, Cathay Pacific, and United Airlines, China Southern's international presence is meager, except in the Southeast Asia, East Asia and Oceanic markets. Its domestic network cannot make up for its inadequate coverage in international markets.

Alliances and code-share arrangements will help bypass regulatory constraints in international expansion and allow convenient connections for its passengers, but won't enhance its competitive edge. In this aspect, the carrier's direct service to Kenya will inevitably improve its network structure and enhance its connectivity.

Additionally, the carrier's African service will strengthen its hub in Guangzhou. A strong airline must have a fortress hub to allow consolidation and expansion. China Southern has just recently concentrated on developing its Guangzhou hub, which, as an emerging hub in the Asia-Pacific, has been growing in the shadow of Hong Kong for decades.

Compared with Hong Kong's 800 or so aircraft movements connecting 150 international destinations operated by 85 international carriers, Guangzhou is only served by 35 international carriers, the majority of which are Asian carriers, including low-cost carriers. Although China Southern has a dominant share in terms of passenger traffic and flights, it lacks the capability to connect its passengers via its own hub, hence impeding its competitive edge. The direct service to Kenya will help rectify its imbalance in network design originating out of its hub.

The airline industry is driving economic development in the 21st century as much as highways did in the 20th century. However, air transport's contribution exceeds that of road transportation by sevenfold. China Southern's direct service to Kenya will undoubtedly further reinforce the bilateral relationship between the two parties and facilitate the economic growth in both markets.

The author is a senior lecturer in the aviation department of Swinburne University of Technology, Australia.

(China Daily Africa Weekly 08/28/2015 page9)