TravelSky Technology Limited was posed with a flurry of questions during the inaugural session - The Chinese travel market now and its future potential of the EyeforTravel.com's Travel Distribution Summit China here in Shanghai.

Published: 16 Aug 2005

TravelSky Technology Limited was posed with a flurry of questions during the inaugural session - The Chinese travel market now and its future potential of the EyeforTravel.com's Travel Distribution Summit China here in Shanghai.

Eyefortravel.com spoke to Larry Liang, spokesperson, TravelSky on the latest developments.

Excerpts:

Do you expect the air ticketing market to open up with the entry of international GDS' such as Pegasus into the market?

It is up to the Chinese government to decide whether and when to open the Chinese market. Travelsky's responsibility is to continuously improve operation capability, reduce operation cost, and provide better customer service.

What would you recommend for the emergence of low-cost airlines in China? Carriers like Spring Airlines have already stated that nation's civil aviation regulations are too stringent to support such business model?

For the five recently approved Chinese private airline companies, cost reduction is their common target. Low cost airline companies have been quite successful in the international market, and made air travel an affordable tool for more and more people. But China's current business environment does not allow us to copy foreign experience indiscriminately.

In terms of cost, aircraft purchase or rental, equipment, and fuel together make up about 80% of total operation cost of airline industry. At present, Chinese aircraft purchase is a government monopoly, and airline companies have to pay related tax. Zhonghangyou dominates the fuel purchase, and fuel price is about 50 percent higher than the average international level. As a result, fuel cost makes up about 40 percent of Chinese airline companies' total operation cost. The remaining 20 percent includes airport fee, labor, and other miscellaneous cost, which can not be effectively reduced either due to the fact that in China there are no second grade airports to provide additional choice.

What are new trends in the way Chinese travelers buy their plans? Do you foresee any immediate threat to traditional way of selling? How is the usage of Internet penetrating?

No matter whether it's direct or indirect, China's air travel product and service have two basic distribution channels: 1. brick and mortar; 2. online. The second channel has grown dramatically during the past few years.

Lots of established players already started investing in China whether its suppliers, travel intermediaries etc? How do you think travel market is going to change with this?

As more and more international capital and technology enter China, our travel industry as a whole will get improved accordingly, but the entry barrier will become higher as well. Moreover, new challenge brought about by international management experience and business culture will accelerate the growth and development of Chinese airline industry and related markets.

What is the future role of the GDS in the distribution of travel in China?

For airline companies and travel agencies, their prime target is cost reduction, followed by brand building and customer relationship management. As GDS, we should try to acquire more customers and help them cut cost by introducing new advanced technology and expanding our product mix.