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INFLIGHT FIGHT RAGES OVER CHINA ASIA INFLIGHT, PARCO BOTH CLAIM EXCLUSIVE PUBLISHER RIGHTS IN SKIES

By Published on .

TOKYO-When it comes to air travel, most passengers have a choice of one inflight magazine in the seat pocket in front of them. But that's not so in China, where at least two publishers are claiming exclusive publishing contracts with airlines and Chinese authorities, leaving the inflight question up in the air.

A revitalized Chinaskies, modernized and updated, is China's newest contender in the already heavy inflight magazine list. Christophe d'Orey, publisher-CEO of Asia Inflight Ltd., has invested $1 million of his own money and two years of his time negotiating with the Civil Aviation Authority of China to make Chinaskies, previously a stodgy magazine published by CAAC, a soaring success.

"Chinaskies is the first magazine in China to be audited by the Audit Bureau of Circulation based in London and will give advertisers access to the 1% of the Chinese population who are the decision-makers and high-income consumers who travel by plane," he said.

The new Chinaskies, based in Hong Kong, is printed by Times Ringier Hong Kong and debuted in January.

But there could be turbulence on the way. Mr. d'Orey claims exclusive distribution rights on 10 Chinese airlines, including four-China Air, China Southern, China Eastern and China Northern-claimed by competitor Parco Ltd. Mr. d'Orey claims to have landed a 20-year exclusive contract with CAAC, but previous contract holder Parco also claims the right to exclusively publish China's inflight magazines.

Parco publishes China Southern Airlines Group News, an eight-page, Chinese-language tabloid to complement Gateway, the new title on Southern Airlines.

From 1989 to 1992, Parco had the contract for CAAC's national Chinaskies but dropped it because, as Anthony Havens, director of Business Development at Parco, said, it was not economically viable to publish a national magazine in China. He said it was a drain on the company's resources and airlines themselves don't want a single inflight magazine because each wants to maintain editorial control. "It's impractical to have one magazine for 32 airlines," he said. As for Mr. d'Orey's new venture with Chinaskies, Mr. Havens said, "I'm waiting to see it happen."

The skirmish between the two could also drag in Time Warner, which is considering buying a stake in Parco, a subsidiary of YGM Trading Co., to give the U.S. giant access to China.

As for Chinaskies, Mr. d'Orey-former advertising sales director with Paris-based L'Express publishing group-plans a controlled and audited circulation of 200,000 with plans to increase to 300,000 next year. He predicts readership of the every-other-monthly to be 1 million by his first audited circulation this July.

Mr. d'Orey claims Parco lost its contract with CAAC as a result of advertisers not paying for ads in time to fund the magazine's production. As a result, Parco produced only four issues of a scheduled 12. Mr. d'Orey faulted Parco for refusing to have the magazine's circulation audited officially and claims the company faked circulation figures. Mr. Havens flatly denies refusing anyone access to Parco's circulation figures and said the company has never missed an issue.

There's good reason for the competition in China. The nation has 14 million annual travelers, making the airline market in China the third largest in the world after the United States and Japan. It is also growing at 20% a year. No one seems to know exactly how many airlines there are in China, but estimates range from 12 to 32 including regional ones.

Mr. d'Orey claims inflight magazines, particularly Chinaskies, are the avenues for advertisers to reach the 14 million high-income travelers. "Because of the difficulty in distribution, China has no national magazines. Airlines are the only way to carry the magazines and to reach people."

Mr. Havens said about 50% of his publications' ads are from Chinese or Hong Kong hotels or other advertisers. He added that Martel, Chivas Regal, Sony, Goldstar and Swiss watchmakers Rado and Piaget are some of Parco's foreign advertisers for its six publications.

Ad rates are different for each Parco publication and range from $3,800 per full page in Shenzhen Airport to $7,015 in Eastern Air's Connections.

Parco handles ad sales although Mr. Havens is looking for representatives-such as Cosmo Public Relations in Japan, Chinaskies' exclusive media representative.

A full-page in Chinaskies costs $12,500 and Mr. d'Orey said he landed 14 pages in the March issue. This is despite China's new ban on cigarette advertising, a major source of inflight magazine ad revenue. March advertisers include BMW, International Telephone Japan, Guerlain Inc., Compaq Computer Corp. and Sotheby's Inc.

To attract worldwide advertisers, Mr. d'Orey is using his L'Express contacts. His U.S. media representative, Ted McCaulley of International Media Corp., Atlanta, said although interest is high, he hasn't sold one page yet.

Advertisers, he said, "like the looks of the magazine and they like the fact that it's in English. Asia is the buzzword in the U.S. right now and people are thinking seriously."

Some of his serious thinkers include Calvin Klein, Guess and McDonnell Douglas. Chrysler has already placed a full page ad in Parco's Connections on Eastern Air.

But given Chinaskies' track record, agencies aren't convinced. Eihei Take, media planner for the Chinese market at Dentsu, said, "I want to check the magazine's direction for at least a year. This magazine seems to be on a two-year cycle with new people coming in all the time, changing the production and making promises."

He said, in the past, Chinaskies "was always late. We started paying after delivery."

Hakuhodo's Man Lee Ma, media director for the Chinese market, said availability of the magazine is the key factor. "I've had many clients who traveled on domestic airlines in China and couldn't find any copies of the magazine. Other times, the March edition is on the planes in May and the May edition isn't out yet." He added that his clients "depend on newspapers and TV for advertising because the inflight magazines have been just too unreliable."

Mr. Havens said distribution is a problem as the Chinese tend to walk off flights with everything from forks to blankets. "Thirty-four million people per year will take our magazines off the planes. This is the main reason why one magazine for all the airlines was impossible."

To combat the disappearing magazine problem, Parco's latest venture is "Welcome Guides" to be distributed by promotion assistants to passengers waiting for checked-in luggage in China's four major airports. Advertisers can either include printed materials at $2,950 per half page or have their message printed outside the bag enclosing the magazine for about 16 cents per bag.

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