Chinese carrier Xiamen Airlines is poised to launch Boeing 787 flights from Xiamen to Sydney later this year, becoming the first airline from a second-tier Chinese city to take advantage of a major expansion of air capacity between Australia and China.
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Xiamen, like larger Chinese airlines China Southern and China Eastern, is a member of the SkyTeam global airline alliance.
SkyTeam managing director Michael Wisbrun said Sydney and Amsterdam were among the destinations Xiamen would target with its new 787 "Dreamliners".
"[Xiamen] are one of the few profitable airlines in China," he said on Friday at the opening of SkyTeam's new 140-seat lounge at Sydney Airport.
Australia and China last month signed a new bilateral air services agreement that in addition to raising capacity from major hubs such as Beijing, Shanghai and Guangzhou for the first time allocated separate capacity for less prominent Chinese cities.
Chinese carriers had previously reached a capacity cap in peak periods, meaning no new services could be added. In addition, smaller carriers like Sichuan Airlines that did not operate out of major hubs had to compete against state-owned airlines China Southern, China Eastern and Air China to be allocated capacity to Australia.
Since the new air services deal was signed, Air China has announced it will offer four direct weekly flights from Melbourne to Beijing from June 1.
Under the agreement, total air capacity between Australia and China will almost triple to 67,000 seats a week by next year.
Sydney Airport chief executive Kerrie Mather, who recently met with several Chinese carriers during a trip to China, expects that by next year, Chinese arrivals to her airport will overtake those from New Zealand for the first time. Chinese traffic increased by 16.4 per cent at Sydney Airport last year, accounting for half of international passenger growth.
"There will be an opportunity for traffic growth immediately," she said on Friday. "What was very exciting while we were [in China] was they are also focusing on regional China as well."
Chinese tourists are the highest spenders among the nationalities that visit Australia, and Sydney Airport has been modifying its facilities to meet the needs of that market including changing food and beverage offerings to better cater for Chinese visitors.
CLSA analyst Scott Ryall believes Sydney Airport has better leverage to inbound Chinese tourist volumes than any other listed company. International passengers account for around 75 per cent of the airport's earnings before interest, tax, depreciation and amortisation and Chinese passengers are disproportionately important to duty-free spending.
Sydney Airport has launched a new 20-month project that will ensure faster access to gates, better wayfinding, wider walkways, more seating capacity and new retail and food and beverage offerings in its international terminal.
The changes are taking place in tandem with a switch in duty free operators, which will result in a temporary reduction in floorspace available to retail and food and beverage offerings.
