SHANGHAI - Budget carrier Spring Airlines is making waves in the travel circuit with its latest Japan ticket promotion fast-catching the fancy of passengers.

Reservations for the Japan flights began on Aug 30, and the flights would be from Shanghai to Ibaraki, about 80 kilometers northeast of Tokyo.

The 4,000-yen seats (before tax) will make up approximately 10 percent of each flight, or 18 tickets per flight.

At the same time, the airline will also offer seats priced between 8,000 yen and 12,000 yen.

Spring Airlines launched the Shanghai-Ibaraki route on July 28, and is the first Chinese private carrier to operate international flights.

At present the company operates mainly charter flights for carrying passengers from travel agencies.

"Individual travelers will be able to book tickets for the Shanghai-Ibaraki flight from Sept 15," said Zhang Wuan, a spokesman for Spring Airlines.

According to Zhang, tickets for individual travelers will vary from flight to flight, but the quota will be within 50 percent of the total ticket amount.

Currently, the flights are available every Monday, Wednesday and Saturday, and Spring Airlines will expand the flights on a daily basis in the future, said Zhang.

An average return flight between the two destinations costs between 3,500 and 4,000 yuan, and the special offer is designed to attract more people to visit Japan, said Gao Shiliang, an analyst from Central China Securities.

"Like the former low-cost flights that Spring Airlines offered, the Shanghai to Ibaraki flights will surely create a buzz in the aviation industry. But considering the small quantity of the discount tickets offered, the impact will be limited," said Gao.

"Surely the low ticket price will attract some tourists, but other travelers such as those on business trips will probably prefer direct flights to Tokyo due to convenience and efficiency," said Wei Fang, an analyst with Goldstate Securities.

Ticket prices account for over 80 percent of the total cost of a Japan tour, according to Michael Peng, sales manager of Shanghai Business International Travel Service Co. Peng, however, feels that there is a catch in one-way tickets.

If the tourist fails to book a return ticket, the one-way ticket price would be as high as 5,000 yuan, he said.

Unlike most of the State-owned carriers, the privately-run Spring Airlines hardly gets any government support or preferential policies, said Wei.

"So its market strategy is more passenger oriented and it leverages itself on low ticket prices," he said.

"The best schedule and routes are often earmarked for State-owned carriers. With budget carriers also being charged the same rates for fuel as well as landing and take-off fees, its profit margin will be thin off when operating on less popular routes," Wei said.

But Spring Airlines has turned all the disadvantages into advantages and reported much better performance than its bigger State-owned peers.

During the first half of 2010, the carrier doubled its profit to 160 million yuan, while its sales rose by 60 percent year-on-year to 1.47 billion yuan, said Zhang.

Analysts said the success of Spring Airlines is also attributed to its parent company Spring Traveling Agency, which ensures steady passenger traffic for the carrier.

By operating the entire industry chain, Spring Airlines' model is an ideal example for other private carriers, said analysts.

China Daily

(China Daily 09/13/2010)