United Airlines' video threatens China business

Updated 2017-04-13 09:30:59 Global Times
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Passenger-dragging incident comes as China-U.S. routes open: expert

United Airlines' business could suffer after a video showing an Asian-American passenger being forcedly removed from an overbooked flight went viral in China, one of the carrier's top growth market, prompting outrage and boycott calls, experts warned on Wednesday.

The warning comes as public anger over the incident has been heating up on Chinese social media platforms like Weibo, China's answer to Twitter, where many, including some prominent figures, expressed outrage and shared unpleasant experiences with the airline.

Following the incident, as of Tuesday, a share price plunge of United Continental Holding, the holding company of the United Airlines, had wiped out 5 million off the airline's market capitalization, marketwatch.com reported on Wednesday

Shares of United Airlines continued to fall on Wednesday to .71 as of 5:00 p.m., down 1.13 percent from the day's opening.

Liu Qiangdong, CEO of domestic e-commerce giant JD.com, wrote on Tuesday that United Airlines' recent violent treatment of a passenger brought back memories of his three "nightmarish experiences" flying United. "I can responsibly say: United Airlines has definitely the worst services in the world, second to none."

"From the ground to the air, United's arrogant service attitude is so horrifying that I have never booked flights since I've experienced it twice," Gao Xiaosong, a Chinese-language composer and co-founder of Alibaba Music Group, wrote on his Weibo Tuesday.

The harsh rating of the airline's services is also accompanied by calls among Chinese travelers to boycott United, which, experts say, could hurt the airline's business in the rising market if not properly handled.

The extent of the impact the incident has on United Airlines' business "depends on the company's public relation management ability to deal with the crisis and calm down public anger," Li Xiaojin, a professor at the Civil Aviation University of China, told the Global Times on Wednesday.

Potential damage

The timing of the incident could also pose serious trouble for the airline, as competition in the market continues to intensify, despite United's heavy investment in the market, experts noted.

China-U.S. non-stop air routes have become some of the most profitable "golden routes" in recent years thanks to Chinese citizens' appetite for outbound travel and a relaxed U.S. visa application process, Li noted.

In 2016, the passenger volume on China-U.S. air routes surged 30 percent year-on-year, ranking as the fastest growing routes among all international flights, according to Li.

However, it is "not only United Airlines, but also its U.S. rivals - American Airlines and Delta Air Lines - and Chinese counterparts that are looking to get a slice of the pie," said Wang Jiangmin, a research fellow with the World Civil Aviation Resource Net based in Hefei, East China's Anhui Province.

Wang told the Global Times that "under such fierce competition, the incident will likely squeeze the air carrier's stakes in China and smash the company's ambitious Chinese plan."

United Airlines opened more direct flights between Chinese and U.S. cities in recent years, including in China's second-tier cities such as Xi'an, capital of Northwest China's Shaanxi Province and Hangzhou, capital of East China's Zhejiang Province.

The expanding routes represent a roughly 20 percent increase in its air transport capacity between Chinese and U.S. cities, industry website cacc.com reported in February, citing Walter Dias, managing director of Greater China and Korea at United Airlines.

The incident also comes at a time when the air carrier has seen burgeoning profitability from the Chinese market.

In 2016, the Chinese mainland generated .2 billion in revenue for the airline, around 6.1 percent of its total revenue, according to a report from FactSet. That was almost double the revenue its main competitor, Delta Air Lines, took in from the Chinese market last year, the report noted.

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