Chinese airlines may see a U-shaped recovery in air travel, as global carriers slog through 2023 to see the earliest glimpse of hope

·4-min read

Chinese carriers are likely to see a full recovery by 2021, as aircraft seats are filled by the gradual return of leisure and business air travel, helping the nation’s airlines beat a worldwide aviation slump that may remain until 2023 at the earliest.

Business travel has quickly rebounded in mainland China, as the infection rate of the coronavirus has stabilised, with little increase in the number of confirmed cases and death toll. Daily flights in China recovered to 43.1 per cent of capacity last month, 6.5 percentage points higher than March when large swathes of China remained under lockdown, according to data by the Civil Aviation Administration of China (CAAC).

In contrast, 2021 global passenger traffic would be between 32 per cent and 41 per cent lower than the pre-pandemic levels, according to a forecast by the International Air Transport Association (IATA).

“As the pandemic is under control in China, necessary business trips rebound quickly,” said Diao Weimin, a professor at the state-run Civil Aviation Management Institute of China, noting that the domestic travel market would be the main engine for early-stage recovery.

“Consumption travel such as tourism has not recovered as quickly, due to uncertainties of the [complete containment of] the virus.”

The divergent fortunes of the aviation industry underscores how China’s draconian stay-at-home orders – helped by demand in the world’s largest population – are translating into a faster, U-shaped recovery. China’s air cargo volume surged, with the average outbound and inbound flights rising by 133.2 per cent in the first two weeks of May, accelerating from 55.2 per cent in April, CAAC said.

Global airlines usually have enough cash on hand to last a few months of idled fleets at best, adding to the pressure of an industry that is going through its biggest survival crisis in history.

“International routes would lean on business travellers to recover first, while the recovery of tourism travel will be relatively slow,” Diao said. “Even when the routes resume, it takes time for passenger volume to climb.”

Flights from Shanghai to Shenzhen recovered by about 60 per cent since May 5, top of the list of domestic routes, according to data by Flight Master. The service on the Beijing-Shanghai, Beijing-Chengdu and Shenzhen-Beijing routes have recovered significantly since Beijing’s city government lowered its public health warning on April 30, Flight Master said.

Still, China’s domestic passenger traffic is unlikely to return to 2019 levels this year, Diao said, but the recovery may be possible in 2022 if imported cases of the Covid-19 disease do not result in a so-called second wave of infections.

An optimistic assessment foresees China’s domestic air travel to fully recover by the fourth quarter of 2021 ahead of the Lunar New Year, if the current trajectory of single-digit new daily cases is sustained, said the Guangzhou Civil Aviation College’s associate professor Qi Qi.

“Economic development will be further emphasised” during China’s legislative meetings starting next week, which would bolster “business trips, as various commercial [and stimulus] projects are launched,” he said.

Domestic air travels will also be bolstered by Chinese tourists, as they substitute local tourism for foreign trips, due to the continued spread of the coronavirus pandemic overseas, and continuing bans on arrivals from mainland China, Diao and Qi said.

Pent-up demand is very strong,” Qi said. “When such tourism demand turns to the domestic market, it will offset the reduction of demand due to economic slowdown and salary cuts, then a recovery to the level in 2019 is very likely in a year or a year and a half.”

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