Major Airlines Cut China Services Amid High Costs, Low Demand

Global airlines are reducing or entirely suspending services to China, citing increased costs from longer routes and weak demand. Following the closure of Russian airspace to Western carriers due to sanctions, airlines must take longer, fuel-intensive routes to reach Asia. Chinese airlines, unaffected by these restrictions, retain shorter, more economical routes, giving them a competitive edge in the region.

Virgin Atlantic and Scandinavian Airlines (SAS) have exited the Chinese market, with Virgin ceasing all Hong Kong flights in 2022 after a 30-year presence. According to Skift, seven major airlines have cut back on flights to China in recent months, with analysts predicting the trend will continue. John Grant, chief analyst at OAG, remarked that “it’s going to get more pronounced before it gets any better.”

The airlines reducing China services include:

• Qantas: Suspended Sydney–Shanghai flights.
• Virgin Atlantic: Ended London–Shanghai route.
• Lufthansa: Dropped nonstop Frankfurt–Beijing flights.
• SAS: Ending Copenhagen–Shanghai on November 8.
• British Airways: Halving Heathrow–Hong Kong flights and pausing London–Beijing until 2025.
• LOT Polish Airlines: Suspended Warsaw–Beijing for the winter.
• Finnair: Reduced Helsinki–Shanghai frequency.

Beyond routing issues, demand has also weakened significantly. Grant attributes this to China’s economic challenges, which have dampened outbound travel and reduced international interest in China. In pre-pandemic 2019, China saw 49.1 million visitors, compared to just 17.25 million arrivals by July this year, per Chinese government data.

U.S. airlines have also minimized China services, reallocating aircraft to routes with stronger demand, like British Airways’ redirection from Beijing to Cape Town, where load factors increased from 55% to 90%. According to Grant, “It’s a no-brainer, quite frankly, and a reflection of the market.” U.S. carriers are maintaining minimal services to retain market presence for when demand potentially rebounds, avoiding future slot allocation issues.

While foreign carriers scale back, Chinese airlines are ramping up flights to Europe. This winter, China-based airlines will operate 82% of flights between China and Europe, compared to 56% pre-pandemic. Despite the low demand, Chinese airlines have added 18 new routes to Europe this winter, aiming to boost cash flow and signal a return to normalcy, though experts question the need for such capacity.

Grant concludes that Chinese airlines may eventually recover, but challenges remain significant. The largest Chinese airline reported a $4.8 billion loss in 2022, and even with reduced losses last year, it lags behind profitable international competitors. “Chinese carriers are desperate for hard cash and to be seen to be returning to normal,” Grant said, highlighting the complexities facing China’s aviation sector as it adjusts to evolving global dynamics.

Sources: AirGuide Business airguide.info, bing.com, cnbc.com

Related News: https://airguide.info/category/magazineonline/airlines/