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'Spring' blooms amid China's air travel boom

By Steven Jiang, CNN
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China's Spring Airlines takes off
STORY HIGHLIGHTS
  • Wang Zhenghua launched Spring Airlines in 2005 with a secondhand Airbus 320 jet
  • Domestic travel in China was 267 million in 2010, compared to 3.4 million in 1980
  • The Chinese airline sector still dominated by the "Big Three" state-controlled carriers
  • Wang grabbed global headlines in 2009 for proposing a standing-room only aircraft
RELATED TOPICS
  • China
  • Air Travel

Shanghai, China (CNN) -- As jetliners roared overhead, Wang Zhenghua led a group of employees in a round of morning tai chi in front of their office next to Shanghai's old airport.

The 67-year-old airline executive has practiced the ancient Chinese martial art for almost four decades. For this master, however, tai chi also serves as a modern-day business philosophy.

"All the tai chi moves look very gentle, but they contain a lot of inner strength -- I do the same running an airline," said Wang, founder and chairman of Spring Airlines, China's first and only low-cost carrier.

"I keep smiling even when I am frustrated by market or regulatory conditions. But inside, my determination to succeed has never wavered."

The government employee-turned-maverick businessman faced long odds when he launched Spring in the summer of 2005 with a secondhand Airbus 320 jet.

The timing was certainly right. Official statistics show the number of air passengers grew from a meager 3.4 million in 1980 to 120 million in 2004. It was a record 267 million last year, trailing only the United States.

The Chinese airline sector, however, was -- and remains -- dominated by the so-called "Big Three" state-controlled carriers. The government has the final say in almost every aspect of the industry -- from aircraft purchase and fuel price to market access and air fares.

Domestic travelers appeared hard to please, with frequent local news accounts on enraged passengers verbally or physically abusing airline personnel for perceived bad service.

But Wang had a catchy slogan -- "let the masses fly" -- and unbeatable prices. Promotional fares started so low -- at 15 U.S. cents -- that some local officials threatened to fine the carrier for "disrupting market order."

Less than six years after its maiden flight, Wang's airline has become an unlikely triumph story. With strict luggage allowance, cramped seating and no free onboard service, Spring's flights on average take off with 95 percent of the seats taken, attracting first-time fliers and road warriors alike.

"Our load factor is No. 1 in the world," Wang said proudly, adding his planes already cram in 30 percent more seats in an all economy-class configuration compared to most other airlines.

Trying to squeeze in even more passengers amid booming business, Wang grabbed global headlines in 2009 for proposing a standing-room only aircraft.

Spring's fleet has now expanded to 22 Airbus 320 aircraft. It carried 5.6 million passengers last year to 14 destinations, including bargain routes to Hong Kong and Japan.

The young carrier has boasted stellar financial performance from the first year on, even during the global economic downturn. Last year's profit topped $100 million.

"Spring shows the low-cost carrier model can be done in a heavily regulated market," said Derek Sadubin, a China specialist with Sydney-based Center for Asia Pacific Aviation. "The potential is huge for the LCC market, which is still in its infancy."

Spring stays true to its mantra by making pilots fly longer hours and turning flight attendants to onboard salespeople and cabin cleaners. But Wang says he pays top dollar to attract staff, luring experienced captains from as far away as Canada and the United States with annual salaries more than $200,000.

Sharing a small office with other executives in a nondescript building, Wang has no mobile phone or secretary. He does have a role model: Herb Kelleher, co-founder of U.S.-based Southwest Airlines, the world's pioneering budget carrier.

"Our goal is to become the next Southwest," Wang said. "We want to have 400 or 500 planes just like they do. It's really up to us to see to make it happen."

It's also up to the government to approve Spring's ambitious plans for expansion -- not always easy in an environment tilted in favor of its state-controlled rivals.

Spring is still shunned from the country's most lucrative route between Shanghai, the airline's base, and Beijing. But Wang says he keeps an open mind.

"I often tell my employees to be grateful," Wang said. "The government has already allowed us into this once-monopolized industry. If they reject an application, we just move on -- and focus on the routes they have approved by flying them well."

That sounds like another business lesson he has learned from years of practicing tai chi: You must bend to stay standing.