Xiamen Air Becomes Second Asian Carrier to Order Boeing 737MAX

LONDON — Chinese carrier XiamenAir has become the first full-service carrier to order the high-density Boeing 737 MAX 200, as the airline announced a Memorandum of Understanding (MoU) at the Farnborough Airshow for 30 aircraft. XiamenAir (formerly Xiamen Airlines) is already a 737 MAX customer via an order for 30 737 MAX 8s that was placed last year, and operates an all-Boeing fleet numbering 141 airframes.

The 737 MAX 200 is a high-density variant of the 737 MAX 8 that (in theory) allows airlines to seat up to 200 passengers in an aircraft configured with a single class, high-density configuration featuring slimline seats. To date the 737 MAX 200 has won 200 firm orders, including 100 from European low-cost carrier (LCC) and launch customer Ryanair (who also holds 100 purchase options) and 100 from Southeast Asian low cost carrier (LCC) VietJet Air.

Xiamen’s existing fleet includes 131 current-generation Boeing 737NGs (17 737-700s, and 114 737-800s), four aging Boeing 757-200s, and six 787-8 Dreamliners. The airline also has 34 737-800s, 4 787-9s, and (in theory) six COMAC ARJ21s on order, though the last of those three orders is nowhere near firm. XiamenAir is also the majority owner of two LCCs, Hebei Airlines and Jiangxi Air, which are based at Shijiazhuang and Nanchang respectively. Both LCCs are small (18 and 2 aircraft in their respective fleets). It also has 60 737 MAX now on its order book, though the MoU will not convert to become a firm order until approved by XiamenAir’s board, parent company China Southern’s board, and the Chinese government.

“We are pleased with this new milestone in our relationship with Xiamen Airlines,” said Boeing Commercial Airplanes President and CEO Ray Conner. “The market-leading efficiency and reliability of the 737 MAX 200 will enable Xiamen and its subsidiaries to expand its growing network, while maintaining an optimal fleet. This MoU further demonstrates the strength of our enduring partnership and we look forward to finalizing the deal in the near future.”

737 MAX 200s earmarked for trunk routes with LCC subsidiaries

XiamenAir is based at its namesake airport, Xiamen Gaoqi International Airport, with additional hubs in Fuzhou and Hangzhou a well as focus cities at Nanchang, Tianjin, Changsha, Quanzhou, and Wuyishan. Its mainline operations are more or less similar to that of most full service Chinese carriers, with high frequency service to most domestic destinations (Xiamen is a domestic hub or focus city for Shandong Airlines, Hainan Airlines, and Chine Eastern amongst XiamenAir’s rivals). One key difference is that it has leveraged Xiamen’s location in the southwest of China to build a genuine regional hub for international flying with wide coverage of key destinations like Taipei, Bangkok, Jakarta, Kuala Lampur, and Tokyo Narita.

That network even includes long distance, Dreamliner flights to Amsterdam, Melbourne, and Sydney, with Vancouver joining the network later this month, though in the typically sclerotic Chinese carrier approach to long distance flying, XiamenAir also plans to launch service between tech hubs Shenzhen and Seattle alongside Vancouver. The 737NG is the core of that short haul network and will remain so after presumable follow on orders for the MAX 8.

But the 737 MAX 200 is a product (or more accurately a marketing distinction) distinctly targeted at LCCs – at the end of the day its the same 737 MAX 8 with more seats installed, though the certification process is slightly different. The only two destinations thus within the XiamenAir Group are current LCC brands Hebei Airlines and Jiangxi Air, which are single base airlines focused on Tier 2/3 Chinese cities. By way of comparison in 2015 (after years of growth), Nanchang is about the size of Indianapolis International Airport in terms of passenger traffic, while Shijiazhuang is similarly sized to Jacksonville International Airport.

Neither of those comparable inspires confidence, though there is certainly room for growth in both towns (though both will have to undergo some economic transition as they are both manufacturing hubs). Both LCCs are named for the province of their home base airport, so it would not make sense to use either as a platform to build a nationwide LCC brand. Our view is that XiamenAir’s LCC developments will include a third brand focused either on a larger hub or on a nationwide brand name that will eventually soak up most of these orders, as we do not see the need for more than 10-15 MAX 200s at both LCCs combined. But the order is low risk. Worst case scenario, XiamenAir can always convert the MAX 200s back to MAX 8s when delivery nears and fly them at the parent airline.

Airways Magazine