China’s domestic air traffic volume is expected to reach a record high during the upcoming “golden week” holiday, as lower ticket prices and curbs on international travel because of the coronavirus pandemic spur travel-hungry mainlanders to seek out local tourist destinations.
The total number of domestic flight trips made between October 1 and 8 will reach more than 15 million, a 10 per cent increase from last year, according to data from online travel booking website Qunar, noting the added volume of mainlanders who would have travelled overseas has boosted demand.
But average airfares based on pre-bookings for the same period declined 10 per cent compared with a year ago to 895.55 yuan (US$132), the lowest in five years, said Qunar, owned by China’s largest online travel booking firm Ctrip.
Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.
“Ticket price is at a low level due to discounts amid oversupply,” said Lin Zhijie, an expert at the official Aviation Think Tank. “In previous years, it was full price or at most less than 20 per cent discount. The lower price stimulates travel demand, but puts pressure on the balance sheets of airlines as overall revenue declines.”
This year’s holiday, which follows the National Day and also includes the Mid-Autumn Festival, comes as the Covid-19 pandemic in the country is largely under control. The capacity of major tourism attractions have been gradually expanded over the past few months, giving China’s tourism sector a much-needed respite. China’s domestic tourism grew 11.7 per cent year on year in 2019, generating revenues of 5.73 trillion yuan.
Chinese carriers in recent months have engaged in a fierce competition for customers, launching various “fly-at-will” unlimited flight packages. Their seat capacity on domestic routes has increased considerably as carriers deploy widebody aircraft used on long-haul international routes while demand has fallen as fewer passengers are flying because of the pandemic.
“This year’s National Day holiday will serve as a key indicator for airlines,” said Lei Zheng, founder and president of the Institute for Aviation Research, an independent think tank. “Compared with last year, we need to look at yield – the average revenue collected per passenger-kilometre. If this increases, Chinese airlines will have turned the corner, otherwise it indicates that a full recovery is still some time away.”
In recent months, Chinese airlines have seen a steady recovery. August saw the largest monthly domestic passenger volume since the outbreak of the pandemic in January, reaching 45.35 million, the Civil Aviation Administration of China said earlier this week. Meanwhile, air traffic last month had recovered to more than 80 per cent of the level in the same period last year, it added.
At least two Chinese carriers saw a year-on-year improvement in several gauges of domestic performance in August. Spring Airlines, a budget carrier based in Shanghai with a focus on the domestic market, said that while its passenger capacity rose by 50 per cent, volumes were not far behind, gaining 37 per cent.
The uptick in demand for domestic air travel has also pushed up stock prices of Chinese airlines, especially those with higher domestic exposure. An airline index tracked by financial data provider Wind Information rose nearly 10 per cent in August, the biggest monthly gain since December 2019.
Looking ahead, Chinese carriers’ recovery still faces headwinds as the outlook for profitability is uncertain and international travel is still clouded by the pandemic, which stands at less than 10 per cent of last year’s level.
The move by some major governments to open travel bubbles to resurrect international travel will help airlines’ recovery if the pandemic is prolonged, said Lei of Institute for Aviation Research.
“The full recovery will have to wait for the emergence of a Covid-19 vaccine,” he said.
More from South China Morning Post:
- Booming domestic travel demand during summer holidays proves to be a bright ray of sunshine for China’s aviation sector
- China Eastern targets business travel with revamp of unlimited flights package as domestic competition intensifies