After success of Beijing-Manchester link, airline looking at daily services

Four months after Hainan Airlines launched its service between Beijing and Manchester, its four weekly flights are operating at full capacity and the company is considering daily flights from next year.

Such high market demand came at an opportune time, as the British and Chinese governments signed a new air route agreement on Oct 11.

According to the new agreement, each country authorizes up to 100 flights a week compared to the current limit of 40, and restrictions on destinations have also been lifted. In light of this news, Hainan Airlines said it would look at increasing the frequency on its Manchester to Beijing route and would also examine opportunities for new flights between second tier cities in China and London.

As well as being revenue generators, the services provide a link between Chinese investors and the growing economies in northern England and the Midlands. British Transport Minister Andrew Jones hailed the services as "a testament to the strength of the Northern Powerhouse".

According to research company York Aviation, the flights will be worth an estimated 250 million pounds ($307 million; 277 million euros) in economic benefits to the UK over the next decade, with two-thirds felt directly in the north in terms of jobs, economic activity and tourism.

"The company aims to provide a comprehensive travel service, for instance, car rental, hotels and catering, to reduce customers' concerns about logistics. It is a similar model to the one the airline uses in Belgium, a market it has operated in for a decade," says Gao Leqi, general manager of the Manchester branch of Hainan Airlines.

Founded in 1993 in the island province of Hainan, the company is China's largest privately owned airline, operating services to 100 cities.

The airline has also grown into a conglomerate, with businesses in sectors including tourism, logistics, investment and eco-technology. That expansion has allowed it to generate capital, introduce efficiency to its supply chain and facilitate the provision of services that air passengers require.

Expansion has been achieved mainly through equity stake acquisitions, including of assets in international markets. One big area of acquisition is travel-related services, with key examples including NH Hotels, Red Lion Hotels, International Currency Exchange, and flight catering service company Gategroup Holding AG.

Hainan Airlines also acquired many targets in the logistics sector, mainly in the airline industry supply chain, to cut costs, improve efficiency and create products and services better catered to its needs. Examples include Australian flight school Arena, Dutch logistics provider TIP Trailer Services and aircraft-leasing company Avolon Holdings.

Some of its international acquisitions are also financial assets that provide stable returns, such as Reuters' London headquarters in Canary Wharf.

Gao says the nature of the Hainan conglomerate gives it a big advantage in helping to build comprehensive services for customers.

Other key advantages, he says, are Hainan's many routes and its code-sharing network, which enable customers to make connections with ease.

The airlines' customer services also have a strong international reputation, winning five consecutive global Skytrax five-star airline ratings since 2011. That puts it on a par with only seven airlines globally. Last year, Skytrax also rated it the best airline in China.

Hainan's Beijing-Manchester flight is starting at a time of growing business links between China and the UK's regional cities beyond London, a result of Chinese investors' increasing familiarity with the UK market.

Key examples include Sichuan Guodong Construction's announcement in July that it was to spend more than 1 billion pounds on property in Sheffield, and Country Garden's decision in September to invest up to 2 billion pounds in Birmingham. The deals are the largest Chinese investments in the UK outside London.

In Manchester, Beijing Construction Engineering Group is investing in the 800 million pound Manchester Airport City, which will develop the area around the airport into a business hub. The group is also a key engineering partner on the project and is working toward helping Chinese companies to settle in the area.

Coinciding with this trend is the UK's intention to attract more investment in the industrial north, through the Northern Powerhouse strategy, which focuses on infrastructure growth in which foreign investment plays a part.

Meanwhile, Chinese visitors to the UK are growing at unprecedented numbers.

Sally Balcombe, chief executive of VisitBritain, said in June the new Hainan Airlines services would help her team achieve the ambitious target of doubling Chinese visitors' spending in the UK to 1 billion pounds by 2020.

Chinese visitors grew by 46 percent last year to 270,000, while spending grew 18 percent to 586 million pounds.

Hainan Airlines' Manchester route was announced during President Xi Jinping's state visit in October and formally launched in June. It is Manchester's second direct air link to China, following the launch of a Manchester-Hong Kong flight by Cathy Pacific in December 2014.

By August, tickets for the Beijing flight were sold out, and Gao says his team is contemplating daily flights next year if it survives the quieter winter months.

His team started analyzing the possibilities three years ago, he says. It found many Chinese students and businesspeople already travel to northern England via London, so a direct flight would give these passengers quicker access to destinations such as Liverpool, Glasgow, Leeds and Edinburgh.

York Aviation says the estimated benefit to travelers as a result of the direct Beijing-Manchester flight is 5 million pounds a year.

Gao says he is excited to introduce more Chinese business and leisure visitors to Manchester, as living in the city for a year opened his eyes to the city's charm.

"I've learned a lot about the city," he says, pointing out that the opportunity to watch football games is a big attraction for such an ardent fan. He also finds Manchester's architecture interesting, as its industrial history has created a unique landscape.

His team is also working on closer collaboration with Tianjin Airlines, a subsidiary of Hainan Airlines that launched a flight from Tianjin to London Gatwick via Chongqing in the summer.

Gao's vision is to create package tours taking Chinese customers to London via Tianjin Airlines, then to the Midlands and northern England, before returning them to China from Manchester, thus allowing them an efficient way to see more of the UK.

He is combining his love for Manchester with the company's strong corporate social responsibility culture to help sponsor Manchester's China-related events.

Hainan just sponsored Manchester's Chinese New Year celebrations, an annual event consisting of a food festival, lion dances and a gala performance by the Manchester Chinese Students and Scholars Association.

In June, the airlines also sponsored the Manchester Dragon Boat Race Festival, in which Gao participated as a rower in a team drawn from employees at Manchester Airport and Hainan Airlines.

"It was my first time participating in a dragon boat race," he says. "It was hard work, but I fully enjoyed the feeling of teamwork, when our employees came together to support each other in working toward a common goal."

cecily.liu@chinadaily.com.cn