China Revamps State-Owned Air Carrier : Name, Other Changes to Boost Competitiveness

China is sprucing up its state-owned airline, the cumbersomely titled Civil Aviation Administration of China, and is hoping to add some panache with a new name: Air China.

The international carrier, which has usually been called just CAAC, unveiled its new name in the United States late last week. China is stepping into the airline marketing game as part of the first major restructuring of its aviation system since shortly after the Communist revolution.

The country wants to become more competitive in the lucrative transpacific air passenger market, the fastest-growing international air routes in the world. U.S. carriers such as United Airlines and Northwest Airlines have been scrambling to maintain and expand their market share in the Pacific as more Asian carriers enter the competition.

“The CAAC name is actually a government name,” explained Zhonghua Zhang, general manager for Air China in Los Angeles. “It is not an airline business name, so it made people confused.”

Behind the new name is a reorganization of China’s air transport system intended to increase efficiency and to make it more responsive to competitive pressures. “We think the system of CAAC is not sufficient to meet needs of people who travel around the world,” Zhang said.

Although Air China will continue to be owned by the Chinese government, it will gain some autonomy, setting its own policies, routes and fares, according to Zhang. The airline serves three U.S. cities: Los Angeles, San Francisco and New York, as well as other international destinations.

Travelers in China became aware of some of the changes last July when the airline was officially renamed within China. Female flight attendants exchanged their trousers for Pierre Cardin-designed skirts, and the airline unveiled its new logo--a stylized phoenix, intended to represent good luck and happiness.

Zhang said Air China has not repainted its aircraft because it is waiting for various foreign governments to approve the name change.

The Chinese government is reorganizing its aviation system into six regions with six carriers that will compete against one another. Three of the carriers have already been established: Air China for domestic service and routes to the United States, Europe and Australia; China Eastern Airlines, which will have some domestic routes and also fly to Japan and Hong Kong, and China Southwest Airlines, most of whose routes will be to Bangkok, Hong Kong and Katmandu, Nepal.

“The competition can make the service better,” Zhang explained.