Austrian Airlines Returns to Shanghai; Interest in Hong Kong Market

The return to Shanghai highlights the continued importance of the Chinese market to the leading European carriers and the high value attached to its outbound market in particular. The airline previously served the Chinese city between April 2004 and January 2007 but stopped the flight as part of the redimensioning of the airline’s long-haul fleet and the decommissioning of its Airbus A330 and A340 long-haul fleets.

Austrian Airlines will resume flights between its Vienna International Airport base and Pudong International Airport in Shanghai, China in April 2016, over nine years since it last served the route. The Star Alliance member will launch the year-round service on a five times weekly basis from April 4, 2016, growing to a daily schedule from May 1, 2016.

The return to Shanghai highlights the continued importance of the Chinese market to the leading European carriers and the high value attached to its outbound market in particular. The airline previously served the Chinese city between April 2004 and January 2007 but stopped the flight as part of the redimensioning of the airline’s long-haul fleet and the decommissioning of its Airbus A330 and A340 long-haul fleets.

“Shanghai once again offers potential thanks to the significantly improved market environment and increased local demand”, explained Andreas Otto, chief commercial officer, Austrian Airlines.

This will be Austrian Airlines second route into China and will complement its existing activities between Vienna and Beijing, a market also served by fellow Star Alliance member Air China. Data analysis from the airline suggests that point-to-point traffic will account for around a third of the demand with about two-thirds of passengers transferring at its Vienna hub and continuing their journeys, flying particularly to other Western and Eastern European destinations.

Austrian Airlines currently offers a total of 26 weekly non-stop flights to Asia in its summer flight schedule. In addition to its five times weekly link to Beijing, the airline also offers up to seven flights per week to Delhi operating a Boeing 767. Bangkok and Tokyo are serviced with daily flights on a Boeing 777. This winter it will introduce a weekly service to Colombo, the capital city of Sri Lanka, from October 27, 2015.

“Shanghai will complement our offering to the most important cities of Asia very well”, said Andreas Otto. “In this way we are resolutely expanding flight service on long-haul routes.”

Meanwhile, it has emerged Austrian Airlines is also in talks with the Hong Kong government to start regular direct flights between Vienna and Hong Kong from summer 2016, according to a report in the South China Morning Post. However, the proposed deal is based around the European flag carrier being able to secure the necessary slots at the already constrained Hong Kong International Airport.

Citing Claudia Reinprecht, Austria's consul general to Hong Kong and Macau, the country's top diplomat in the Special Administrative Region of the People's Republic of China, the article suggests Austrian Airlines will seek to become an alternative provider for transit traffic into Central and Eastern Europe as well as support the point-to-point demand between Hong Kong and Vienna.

According to Reinprecht, Vienna provides more connections to Central and Eastern Europe and the Black Sea regions than Frankfurt, to which Cathay Pacific and Lufthansa currently fly. "Vienna is underestimated in Hong Kong. The direct flight is of strategic importance," she said.

However, a shortage of take-off and landing slots at Hong Kong International Airport has created a major stumbling block for the ambitions to become a reality.

"It is a technical problem in that the capacity of Hong Kong airport is limited," she said. "From the Austrian standpoint, any efforts to increase capacity would certainly help us get a direct flight between Vienna and Hong Kong."

A Hong Kong operation could complement Austrian Airlines existing link between Vienna and Beijing, a route that is also served by Air China and the new link between the Austrian capital and Shanghai.

Our analysis if Sabre Airport Data Intelligence demand statistics shows a consistent level of traffic between Vienna and Hong Kong that could form a platform for Austrian Airlines to enter this market. Annual bi-directional demand this decade has consistently exceeded 20,000 passengers, with levels reaching 27,000, its highest level over the past ten years, in 2014. Emirates Airline is currently the largest operator in this city pair market (via Dubai), while Lufthansa (via Frankfurt) and Cathay Pacific also have sizeable shares.