As long-haul international routes from tier-two cities in China have developed rapidly, the development of decentralization is obvious: in 2009 there were 7 cities in China that had opened long-haul international routes, and in 2015 there were 16 cities. Tier-two cities have focused on short-mid range flights (Japan, Korea and Southeast Asia) but as the average annual growth rate of the long-haul market is over 30% higher, around 50 flights per week would only capture nearly 4% of the long-haul market.

Tier-two cities opening long-haul international routes will objectively fragment domestic hubs, but this does not affect our hub strategy. The Company will make full use of our diamond hub network and multi-brand advantages to strengthen the global layout with long-haul routes as a core strategic market. At the same time, we will make further inroads to Asia Pacific, integrating with national strategies and filling the gaps in our network. To be more specific, we will first expedite the construction of the Chengdu international hub and focus on supporting the opening of mid-long haul international routes for Shenzhen Airlines. With this we aim to expand early into the European, North American and Australian route network with our Chengdu and Shenzhen hubs. Next, we will improve the accessibility of international routes at Pudong Airport and open more international routes with the Beijing hub, forming a link between markets and improving market coverage. Third, Air China will increase the frequency of Beijing hub international routes and open additional tier-two city international routes to form new market growth and make travel more convenient. Fourth, we will actively cooperate with local governments to open international routes.