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China’s Airspace Industry Struggles

China Airlines Ltd. (TPE:2610), China Southern Airlines Limited (SHA:600029), Air China Ltd. (SHA:601111) and China Eastern Airlines Corporation Ltd. (SHA:600115) are the big players in China’s airline market right now. However, keeping competition at bay is another story. With markets popping up all across the map in China and the rest of the world, it is easy to see how an emerging airline could end up capturing some profitable market segments.

Bullying the big boys is no easy task when you are a start-up airline with a handful of planes and staff. The only hope for a start-up airline is to capture a neglected route and make it profitable. Baltia Air Lines Inc (OTC:BLTA) is an airline in the US that has taken notice that there is no direct route from St. Petersburg to New York and is planning to capitalize on a highly sought after route. Surely something like this is boiling up in China, because evidently China Eastern Airlines gave up a route to South Africa.

Air China is the 18th largest airline in the world by fleet size and is based out of Beijing. It is the second largest commercial airline in China. Air China flies over 5,000 flights per week, and takes people to hundreds of location across the globe. The company brings people to destinations in Asia, the Middle East, North America and Western Europe. Air China joined Star Alliance in 2007, which allowed the company to gain a competitive advantage. Air China has a market cap of $150.69 billion.

China Southern Airlines is a member of SkyTeam and is the world’s 5th largest airline by passengers carried. The company has its headquarters in Guangzhou Baiyun International Airport and also operates out of Beijing Capital International Airport. The company has hundreds of planes in its fleet and flies its passengers to over 120 destinations across the globe. The company went up on the NYSE and HKEX on July of 2000 and captured over $700 million for the company. China Southern Airlines currently has a market cap of $56.67 billion.

China Airlines has over 10,000 employees and is based out of Taiwan. The company flies to destinations across North America, Europe, Asia and Oceania. China Air has been in talks to become a part of SkyTeam sometime in the near future. The company has a generous number of planes in its fleet. It flies to hundreds of locations across the globe and competes for Chinese airspace just like the rest of these companies. China Airlines has a market cap of $82.02 billion.

China Eastern Airlines is based out of Shanghai, China. The company had over 16,000 employees in 2005, and is continually expanding their operations. China Eastern Airlines travels to places all across the globe, with destinations in Asia, Europe, North America and Oceania. In April of 2010, China Eastern announced plans to join SkyTeam, which would allow for them to consolidate operations and become more competitive. The company is hoping to fend off competitors by building alliances and increasing efficiency in their existing markets. China Eastern Airlines has a market cap of $89.94 billion.

Titans like these are constantly in a struggle against time to hammer out competition. With new cities springing up all the time in China, and companies continuously focusing on a global environment, smaller companies are going to start getting the edge. Behemoth airline companies are unable to notice every single detail when they have their eyes focused in on large markets. Small emerging companies are sure to get into the action because they are not even capable of tackling huge flight markets. Their eyes are set on capturing what the big players are missing and that is their strategy for success.

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