Sep 6, 2007

The Times, They are A-Changing... again

I recently came across this item -- and noted with interest the claim that Air China is now the "world's most valuable carrier." I've never heard that term before. Does anyone know how this is calculated? It does show however, that the world is rapidly changing and there is a new world power for the west to contend with. How will it all play out? Historically, those with The Power do not relinquish it easily...

Air China open to mergers with rival carriers.

Air China, now the world's most valuable carrier, will consider the option of merging with other Chinese airlines, including China Southern Airlines, if the opportunity arises. Air China is examining a possible restructuring of the sector as competition from foreign airlines and newly arisen local carriers is growing following the opening of China's civil aviation market. Beijing is restructuring state-owned companies and the number of central government-controlled firms will fall sharply in coming years as they adapt to market changes and fend off competition. Air China's rivals include Shanghai Airlines, Shenzhen Airlines and Hainan Airlines.

Source: Reuters


Mike said...

The CIA factbook says that US GDP last year was $13.13 trillion and that China's was $10.17 trillion. I don't have the economic growth figures available but I'm almost certain that China's growth is faster than the US.

Within the next 5 years China will be the biggest economy in the world. Ultimately economic power is what creates and maintains alliances and generates "direction".

The challenge for many in the west is that traditionally our alliances have been with countries that have similar cultural histories - take the ANZUS alliance, three countries with similar cultural stepping off points.

The future trading relationships and alliances will be across cultural differences. This will create challenges.

Anybody who doesn't believe that China represents a big part of their future has been misleading themselves - for at least the last decade.

At the APEC summit now on in Sydney the big game has been China. President George W Bush meets Hu Jintao, John Howard meets Hu Jintao...the big challenge is the left over animosity between Japan and China. China was deeply wounded by Japanese atrocities in China before and during WWII. That hurt remains. In addition the unresolved issue of Taiwan represents a potential flash source and a challenge that must be addressed.

So here's a question: Do your children speak Mandarin? Doing so will make it much easier for them to participate in their future.



Anonymous said...

I would have thought that the largest carrier in the most populous nation would easily be somewhere near the top of the list.....

Soaring Student said...

Beware of marketing spin.

I used to work for an insurance company. There were 5-6 "biggest" insurance companies in Canada, ad which one was biggest depended on which ruler you used. Assets under administration, annual profit, most number of policies issued, return on equity, annual profit, etc.

There are probably multiple ways to determine the world's most valuable airline. The simplest is "what would it sell for?" If an airline is essentially non-sellable, either due to reputation (Aeroflot? Air Kenya?), or current financial valuation (Chapter 11 airlines in the USA might be candidates here), or because it is state-owned and simply not available for sale, then it could be argued that they are worthless.

Of course, making a profit, or having some method of generating cash, would be a good measure as well.

Aluwings said...

"which one was biggest depended on which ruler you used"

Exactly what I was curious about with this statement. How is it measured? Value of physical assets/cash? Value of route structure? Profitability? Potential Profitiablity? ... (lies, damn lies and statistics, etc.).

S said...

It's baed on market capitalization.
It's about RMB 225billion (US$29.8bn)

moe said...

Here's a new, interesting blog entry that's quite relevant to aviation in China:

moe said...

Oops, fixed link: