Produced by Flower Finance Observation
Editor丨Duozi
There is no free food and beverage during the flight, no free check-in, business class is also withdrawn, and the vacant seats are installed, the seat pitch is still very small, and the backrest angle cannot even be adjusted, just to pull a few more people on a trip.
Some people say that he is "the first person in low-cost airlines", while others say that he is "a low-cost civil aviation flight adventurer". Wang Zhenghua and his Spring Airlines, who are determined to bring down the price of air tickets, have never lacked topics.
He once said: Aviation should not be rich or expensive, and more families should be able to afford to fly. He dreams of allowing migrant workers to also get on a plane and go home for the New Year.
Price butcher
In China, most of the people who take planes are either rich or expensive, and they don't dare to sit at all because they don't have any money.
In 2019, economist Li Xunlei published "How Many People in China Have Not Taken a Plane - Exploring the Path to Expand Domestic Demand", pointing out that there are still 1 billion people in China who have not taken a plane.
Airplanes have been widely known as a means of civil transportation, and domestic airports of all sizes have long been all over the place, why are there still so many people who have not taken a plane?
Expensive and people's first sense.
Compared with the 100-yuan high-speed rail, the ticket price of thousands of yuan makes many people feel unaffordable.
Born in the devastated era, Wang Zhenghua was the first person to change this situation, and he has been a staunch low-cost executor in the aviation industry, with a clear goal:
Knock down the high ticket price.
In 2004, with his outstanding business methods, "getting on a plane to travel" became the loudest slogan of the Spring and Autumn International Travel Service, and Wang Zhenghua, who spread all over the country, began to enter the aviation industry.
The Civil Aviation Administration of China approved private enterprises to operate airlines, and a total of three private airlines were approved in the country that year, and Wang Zhenghua's Spring Airlines became one of them, and China's first "low-cost airline" set sail.
To make more people can afford to travel by plane, so that taking a plane is as cheap as taking a sleeper train, is Wang Zhenghua's initial positioning of Spring Airlines.
In July 2005, Spring Airlines made its maiden flight from Shanghai to Yantai, and all 180 tickets were sold out, and the special ticket was as low as 199 yuan.
As a result, it has encountered-for-tat from its peers.
Several state-owned civil aviation enterprises jointly complained to the Civil Aviation Administration of China, pointing out that Spring Airlines' 199 yuan fare violated the fare regulations of the Civil Aviation Administration of China, which is far below the minimum lower limit, which is 4.5% off the market price.
At that time, the policy was backward, and the regulatory authorities stipulated that airlines should implement the fare level of domestic routes, and the increase should not exceed 25% of the benchmark price, and the decrease should not exceed 45%.
But Wang Zhenghua still has a soft spot for ultra-low prices. At the end of 2006, Wang Zhenghua launched a 1 yuan air ticket on the route from Shanghai to Jinan, which once again caused a sensation in the aviation industry.
However, such a move was immediately reported by friends and businessmen. Soon after, the Jinan Municipal Price Bureau issued a warning to Spring Airlines to disrupt the market and issued a fine of 150,000 yuan.
was surrounded by peers, and Wang Zhenghua was not favored.
Shortly after Spring Airlines' maiden flight, Liu Jieyin, chairman of Okay Air, China's first private airline, pointed out: "China is not yet in a position to develop low-cost airlines, and it will take at least three to five years for the low-cost airline market to mature." ”
Wang Zhenghua didn't care, vowed to carry out the "low-cost airlines" to the end, and successively launched 99 yuan, 199 yuan, 299 yuan, 399 yuan and other "99 series special tickets".
By 2022, Spring Airlines' passenger kilometer revenue will be 0.358 yuan, which is about 40% lower than the average of the three major domestic airlines (China International Travel Service, China Southern Airlines, and China Eastern Airlines).
Spring Airlines attracts passengers by offering cheaper fares than other airlines, which is also known as the "Pinduoduo of the aviation industry", allowing its load factor to reach more than 90%, far exceeding the industry average of about 80%.
Although a high load factor can further dilute fixed costs and bring a more significant cost per passenger advantage, it is much lower than the price of peers, and whether it can make money has been debated before.
Judging from the revenue and profit indicators, Spring Airlines has become the "profit king" of the market.
In the first three quarters of 2023, Spring Airlines achieved operating income of 14.1 billion yuan and net profit attributable to the parent company of 2.68 billion yuan. Although the scale of revenue is not as large as that of many companies, its net profit ranks first among A-share listed airlines.
During the same period, Spring Airlines' net profit margin reached 18.98%, 11.80 percentage points higher than Juneyao Airlines and 18.84 percentage points higher than the average of the three major airlines.
Low-cost "masters"
Behind the low ticket prices and high profits, there is more low-cost support.
As far as airlines are concerned, the cost expenditure mainly includes fuel, airport charges, aircraft introduction, etc., and Wang Zhenghua has compressed the cost to the extreme, saving money to the bone.
In order to save fuel, he will ask pilots to let the aircraft fly higher under the premise of ensuring safety, the high-altitude air is thinner, the flight resistance is smaller, and the amount of fuel consumed will be reduced accordingly, which can save about 30 million yuan per year.
There are also strict restrictions on the weight that can be carried on airplanes, and even magazines have to be replaced with thin ones in an effort to reduce the weight in the air and reduce fuel consumption.
Other people's flights focus on a tall one, not only free airline meals, but also all kinds of free drinks, Wang Zhenghua's Spring Airlines, and almost nothing.
Not only do they not provide free meals and drinks on board, but even the kitchen has been dismantled, and the vacated seats are installed with seats, which can pull up to 6 people in one trip.
Compared with the traditional two-class layout aircraft, the number of seats on a single plane is 10-15% higher, and the seat distance is on average 28 inches smaller than that of other airlines.
Wang Zhenghua even had the audacity to plan to launch standing tickets on the plane, and even thought of a plan to shorten the distance between the front and rear rows by modifying the seats, which could increase the passenger capacity by about 40%.
"As long as the government dares to approve it, I dare to sell standing tickets on the plane," he said.
But the plan was shelved due to security concerns.
However, thanks to the increase in the number of seats per aircraft and the control of jet fuel costs, Spring Airlines' unit fuel cost has been reduced by about 25% compared with the average of the three major airlines.
In addition, in order to reduce take-off and landing fees and airport service fees, Spring Airlines will also adopt measures such as landing at relatively vacant second-class airports, long-distance stands, and half-hour stops, so as to reduce the parking fee by 5,000 or 6,000 yuan per time.
All the aircraft in operation are uniformly equipped with Airbus A320 family aircraft, which not only reduces the cost of aircraft purchase and leasing, but also reduces the difficulty of maintenance engineering and the training complexity of pilots and maintenance personnel.
Spring Airlines' depreciation and lease costs over the years are about 30% lower than the average of the three major airlines, and the unit maintenance cost of a single fleet and single engine is also about 30% lower than the average of the three major airlines.
"Picking" to the extreme
"Half of the money is earned, half is saved".
Wang Zhenghua has always believed in this sentence that his mother often recited when he was a child, and he has also practiced it all his life.
If you go to Spring Airlines' headquarters building in Hongqiao, Shanghai, you will be amazed at what you see.
The building is full of a sense of age, making it difficult for people to imagine that this building, which was converted from a hotel in the 80s of the last century, is the headquarters building of a listed company.
The founder Wang Zhenghua's office is also quite simple, with an area of only 10 square meters, and a small sofa opposite the desk was bought by him for 100 yuan 20 years ago and has been used for more than 20 years.
It wasn't until 2020 that Spring Airlines began construction of its new headquarters building.
But he never takes first class on business trips, and generally only stays in hotels below three stars, and even the car is 100,000 yuan Geely Emgrand, Wang Zhenghua is probably the most "picky" boss in the aviation industry.
He also made a rule for the company: all leaders do not have special cars, and advocate sharing.
In 2008, Wang Zhenghua led a team to London for inspection, and even brought a large number of foods, including 60 bags of instant instant noodles, 40 bags of mixed noodles, mustard, hot sauce, eggs, etc.
An engineer of the company once joked: "On a business trip with Mr. Wang, I ate 'pig and dog food', lived in a basement, and vowed to carry out low-cost airlines to the end." ”
The boss set an example and thoroughly integrated thrift into the enterprise, and also hit the sales and management expense ratio of Spring Airlines to a low level in the industry.
In 2019, Spring Airlines' unit available seat kilometres (ASK) sales and administrative expenses were RMB0.0060 and RMB0.0042 respectively, far lower than the average of the three major airlines, with relative cost savings of 74.2% and 69.7% respectively.
The boss frantically "saved money", but it did not affect the safety and security of Spring Airlines.
In February 2024, Spring Airlines was awarded the "Three-Star Flight Safety Award" by the Civil Aviation Administration of China (CAAC) for 3 million hours of continuous safe flights, becoming the only private airline in China to receive this honor.
Wang Zhenghua said: "In the Spring and Autumn Period, there are two costs that will not be saved, one is that safety does not reduce costs, and the other is employee wages. ”
Although it is considered to be very "picky", Wang Zhenghua will definitely spend it where it should be spent.
At Spring Airlines, Mr. Wang took only 30 percent of the shares, and the rest was divided equally among employees. The salaries of the pilots under him are generally 20% higher than those of their peers, and the salaries of ordinary employees are more than 10% higher than those of their peers.
This has become an important reason why Wang Zhenghua "picks the door", but the employees are still full of enthusiasm. The vast majority of incumbents believe that although it is hard to work in the spring and autumn, there is a rush.
"Wealth for me, whether there is one more zero or one less zero in the back is just that. When the money is given to everyone, everyone will feel that they are the owners of the enterprise, which will have many benefits for the development of the enterprise. Wang Zhenghua said.
Precise positioning, one-hit hit
The first share of China's low-cost airline was born.
In January 2015, the 10th year of its establishment, Spring Airlines was successfully listed on the Shanghai Stock Exchange, becoming the "No. 1 low-cost airline in China".
At that time, Wang Zhenghua, who was 71 years old, led 100 employees, dressed in Chinese-style clothes, and played Tai Chi on the trading floor of the Shanghai Stock Exchange, which attracted the attention of the outside world.
Wang Zhenghua's other identity is also widely known: the sixth-generation inheritor of Yang-style Taijiquan.
He talked about the duel with others when his master taught boxing when he was young, and Tai Chi watched the changes, borrowed the strength to fight, and killed with one blow, which left a deep impression on him.
At the age of 38, Wang Zhenghua quit his iron job bowl, and in order to let the educated youth have a bite to eat, he founded 6 enterprises in one go, such as automobile repair shops, freight companies, long-distance passenger transport companies, taxi companies, etc.
But when he decided to leave, he was told that he could only take one with him, and that it was the most depressed travel agency. At that time, the "Spring and Autumn Tourism Agency" was located in a 2-square-meter corner on the side of the street, which could hardly hide its shabby.
At that time, the largest source of tourists in the tourism market was group tours, which were monopolized by several state-owned travel agencies, and the Spring and Autumn Tourism Agency had no competitiveness at all.
However, after some quiet research, Wang Zhenghua found that with the development of the domestic economy and the improvement of people's living standards, individual tourism will definitely surpass group travel.
Do not compete with other companies head-on, but find out what the market lacks and their own positioning, and finally he hit with a blow, in just a few years, the Spring and Autumn Tourism has become the first domestic tourism.
In 1994, Spring International Travel Service had 31 branches and more than 3,000 agents across the country, and was hand-picked by the National Tourism Administration as "No. 1 in the country", and ranked first in the list of top 100 travel agencies in the country for many years.
At the beginning of the founding of Spring Airlines at the age of 60, Wang Zhenghua relied on in-depth observation and accurate positioning, hit with a low price, and killed his own way out of the market monopolized by state-owned airlines.
However, as China's first low-cost airline, from the first day of take-off, Wang Zhenghua faced a very bumpy road, and his frequent "low-cost bombs" made his peers hate itchy.
In order to circumvent the ticket agent and the possibility of being blocked by state-owned airlines, Wang Zhenghua could only devote himself to studying and breaking the air sales system monopolized by TravelSky for many years, and establish his own ticketing system and departure system, which was completely detached from the TravelSky system commonly used by domestic airlines.
Through the independent development of air tickets and departure systems, the company mainly relies on the Internet to order e-tickets, which saves the labor cost of ticketing and delivery, and also makes Spring Airlines' sales cost lower than that of ordinary airlines, saving up to hundreds of millions of yuan in "tolls" every year.
The lag of policies, unfair treatment, and the suppression of state-owned airlines, in fact, private aviation companies have encountered many difficulties since the day of take-off.
Lan Shili, president of Wuhan Dongxing Airlines, has a deep understanding that eight state-owned airlines have jointly issued a "blocking order":
It is not allowed to endorse the tickets of Dongxing Airlines to interline, all agency points are not allowed to sell Dongxing tickets, all travel agencies are not allowed to help Dongxing book tickets, and the offices of various scenic spots in Wuhan are not allowed to help Dongxing book tickets, otherwise the agents and travel agencies will not be able to get the tickets of these eight airlines.
Lan Shili met Wang Zhenghua for the first time and vomited bitterness: "Mr. Wang, you are the first person in our Chinese private aviation to roll a mine." ”
But Wang Zhenghua, the first person to roll landmines, is obviously better than other companies.
In contrast, the private airlines that tested the waters with Spring Airlines were either bankrupt or acquired by state-owned assets and turned into state-owned, and Spring Airlines was able to survive in the cracks and become the "profit king" of the industry, which is an "outlier".
Summing up decades of entrepreneurship and management history, Wang Zhenghua said: "First, we must understand and find the correct positioning based on our own advantages; ”
In Wang Zhenghua's view, Spring Airlines' goal is to firmly provide low fares, so that every Chinese can get on a plane, and migrant workers can also take a plane to go home for the New Year.
(Article source: Flower Finance Observation)
*This article is based on publicly available information and is for information purposes only and does not constitute any investment advice