Mesa, Shenzhen make a deal for the short haul

Steve Tripoli Dec 22, 2006

TESS VIGELAND: Remember that Boston-to-Florida flight that took you through Detroit? Airlines call it the hub-and-spoke system. They feed all sorts of passengers into one or two big cities, Then spin them off like so many FedEx packages to their final stop. Well today a U.S. hub-and-spoke specialist, Mesa Airlines, is cashing in on the business world’s Holy Grail: China. Marketplace’s Steve Tripoli explains why both sides want this to work.

STEVE TRIPOLI: Shenzhen Airlines is named after the booming South China city that got its start as a special economic zone. Shenzhen flies over a hundred routes but has virtually no small regional jets. Neither do China’s other major airlines. Analyst Michael Boyd of the Boyd Group in Colorado says that’s why Shenzhen’s turning to Mesa.

MICHAEL BOYD: They need the expertise that Mesa Airlines can give them. And this is a large operation. We’re talking Beijing, Nanjing, Xian. That covers a lot of territory. So, it’s a scope where they probably do need to bring in, someone with a lot of regional expertise.

And they need that expertise now. Nicholas Ionides of Air Transport Intelligence in Singapore says the Chinese government’s under the gun. It wants visitors to the upcoming Beijing Olympics spreading out beyond major cities.

NICHOLAS IONIDES: If it gets off the ground as they anticipate, it will be that feeder-type operation allowing services to secondary cities beyond the major destination.

Michael Boyd says Mesa’s stake in all this is obvious.

BOYD: I mean, this is just one start. They can place a number of airplanes, and it spreads their revenue base over more operations.

It isn’t only that Mesa wants to crack China’s fast-growing market. It also wants to spread its bets away from the cut-throat American field. Lots of fliers gripe about the hub-and-spoke system. But Boyd says Chinese fliers are likely to hear the same thing Americans hear about that.

BOYD: Well, the hub-and-spoke system is the only way of making anything work, whether it’s in the U.S. or in China. The hub-and-spoke system is the only way of bringing a lot of service to a lot of communities. There’s no other way.

So buckle up, Chinese fliers. And pack light. Those regional jets have small overhead compartments.

I’m Steve Tripoli for Marketplace.

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