Last week I reported that American Airlines would be offering non-stop service between Chicago and Shanghai. Now, Continental Airlines is hoping to service Shanghai as well; an effort that would not only give consumers choice but might bring Continental out of the red.
Last year the U.S. Government approved Continental for offering flights to Beijing. And Continental Airlines is currently the only U.S. carrier to offer daily non-stop service from their New York area hub, Newark Liberty International Airport, and Beijing, China. Now they are hoping that, come March, they will be increasing their presence in China where economic growth is fueling passenger demand.
Having added Beijing to their Asia Pacific region in June –- Continental has been servicing Hong Kong since 2001 – the airline is confident that by expanding to China’s southern metropolis they will be within reach of their goal of profitability in Fiscal ’06. Flying domestically is no longer a profitable business. Asia Pacific president Mark Erwin declined to say when the company might see a turnaround. However he did indicate that for each U.S. dollar of profit in the oil price, Continental Airlines paid out 42 million U.S. dollars annually. Asia Pacific currently makes up about 8 percent of Continental’s total revenue and the data shows that adding a Shanghai route may be just what the airline needs.
Asia's low-cost airline industry has begun to take off, with Qantas Airways discount affiliate Jetstar Asia and AirAsia Bhd trying to emulate their U.S. peers. Erwin indicated that Continental does not plan to follow a budget airline model, stating, “We don't believe that we need to be the cheapest out there.” Erwin continued with an analogy that gives this reporter pause, “We can take so much cheese off the pizza that people won't buy the pizza,” I think Mr. Erwin must have skipped lunch because that analogy does not speak well for Continental. I’m sure he meant his competitor airlines, but it is not my job to interpret, only to report.
Continental’s application to the U.S. Department of Transportation to launch direct flights between New York and Shanghai has not received approval at date of this reporting, however Erwin is hopeful it will arrive soon.
