Tuesday, December 16, 2008

Havoc in the Skies

It's not even Christmas yet, but already there is a mad rush for Chinese New Year or Spring Festival airline tickets.

Yesterday afternoon I tried to book tickets to Sanya, Hainan Island for some sun and surf from an e-ticket purchasing website called e-Long.

About half an hour later a woman from e-Long called to confirm my reservation and could I pay for the tickets now even though I promised to pay for them a few days later on Saturday.

I explained I didn't have the cash on me and would rather come get the tickets myself.

But today I received a text message from the company saying the airline had cancelled my reservation.

Excuse me?

I called back e-Long and they politely explained they were at the mercy of the airline who felt a reservation wasn't good enough and took back the tickets to re-sell at another price, usually a more expensive one.

The manager explained that this was a common practice of airlines, a way to make customers pay as soon as possible to secure seats.

However, the airline industry in China is still a fledgling one as the majority of consumers cannot afford to fly.

So how is it that airline companies can treat potential customers this way, cancelling a reservation when I had the intention to pay?

What is also interesting is that because of the current financial crisis, airlines in China are losing lots of money.

Most of them have some kind of state ownership and they have been told by the government not to purchase anymore new planes to cut costs.

But also most of these airlines are saddled with huge amounts of debt that amounts to hundreds of millions of yuan. Each.

For example Shanghai Airlines reported losses of 414 million yuan ($60.47 million) in the past three quarters this year, with its debt-to-asset ratio at 91.35 percent.

That's not a really good financial position to be in.

Just the other day the government bailed out China Southern Airlines and China Eastern Airlines with 3 billion yuan ($438 million) each.

Many have not paid their airport fees, others also hedged on jet fuel, buying when it was a high price and now oil has dropped to below $50 a barrel. Some have even reported airports refusing to refuel their planes unless they paid the cash upfront. Literally.

How embarassing.

The government really needs to look at the airline industry and restructure management and also look at how they are run. It looks like there may be too many companies and none of them seem to be managed properly let alone efficiently.

In the meantime, what about us customers? If these airlines are losing money like the constant news reports say they are, then why treat us like shit?

1 comment:

ks said...

once again china needs a good team of managers for all her indusrtries.