Hainan Airlines aims growing in US market

Hainan Airlines made history Tuesday when it became the first Chinese airline to fly nonstop between Beijing and Chicago's O'Hare Airport. Chicago is only the second United States market Hainan serves. The first was Seattle, where nonstop service from Beijing launched in 2008.

But in an interview Wednesday, Hainan executives clearly signaled Chicago and Seattle aren't the only two United States markets the carrier plans to serve in the years ahead. Hainan Vice-President Wei Hou said New York is on the carrier's radar screen now, although all the necessary regulatory hurdles to operate from New York have not yet been cleared.

Still Hou said service from Beijing to New York could come as early 2014 or 2015. Boston and Dallas are two other markets where Hainan has all the necessary approvals to start service, but no timeframe has been established for when service to those two markets might begin, Hou said.

Hou said Hainan has been slow to expand service into the United States because of Boeing's delays in unveiling its Boeing 787 Dreamliner. "We were waiting to take delivery of the 787," explained Hou. Hainan Airlines finally received its first two Dreamliners in July, and will begin flying the new plane on the Beijing-Chicago route in December.

Founded in 1993, Hainan Airlines is still a mostly unknown quantity in the U.S. But it was the U.S. that Hainan Airlines' founders turned to two decades ago for money to launch the airline. Specifically, Hainan went to New York's Wall Street and found George Soros, who was one of the first investors in the airline, according to Hainan executives.

Soros appears to have made a wise investment. The relatively young Hainan Airlines already has a coveted five-star ranking from Skytrax, the British-based independent airline ranking firm. Hainan got its five-star Skytrax ranking because it chose to focus on getting a lot of little details right in the service it offers passengers. That includes a variety of passenger lounges at its main airport hub in Beijing and meticulous onboard service. The lavatories in business class, for instance, are cleaned after each use, Hou said, and only slightly less frequently in economy class. Business class passengers have limousine service available when they deplane in Beijing.

Now that it is starting to spread its wings in the United States, however, Hainan will have to compete against two behemoths, Chicago-based United Airlines (NYSE: UAL) and American Airlines, both of which are moving quickly to establish strong footholds in China. Both UA and AA now offer nonstop daily service from Chicago to both Beijing and Shanghai in China. For the purposes of competing against two much larger carriers, Hainan is positioning itself as a "boutique" carrier with a more personal and luxurious style of service.

Hainan executives said they expect the Chinese airline to be a popular choice for Chinese travelers looking to visit the United States. And Hainan's Hou expects travel between the two countries to grow quickly over the next several years — fueled by ever more students looking to learn about Chinese culture, retirees seeing the world, parents adopting children and a steady stream of business executives.

SOURCE: bizjournals.com