China Eastern Airlines yesterday said the Olympic Games might not boost ticket sales as much as forecast as growth in international passengers was under pressure from the yuan's appreciation and unrest in Tibet.
The Shanghai-based airline said international passenger traffic fell 4.63 per cent last month from March last year, while passenger numbers from Hong Kong and Macau dropped by more than 5 per cent. Overall passenger numbers rose 1.12 per cent on strong domestic demand.
China Eastern said the yuan's appreciation had resulted in a negative impact on inbound travel, but it remained positive on its 2008 profit outlook, according to an analyst who attended a teleconference with the airline yesterday.
The company said news of protests over Beijing's handling of riots in Tibet would also discourage international travellers from visiting the mainland during the Olympics.
'Their new route to South Africa also dragged down overall international passenger growth as the service has not been well-received,' said Daiwa Institute of Research transport analyst Kelvin Lau.
Routes to Hong Kong and Macau are suffering from competition and the company expects ticket sales to decline this year as a result.
After new rival Shanghai Airlines started flying to Hong Kong last year, China Eastern reduced capacity on the route by deploying smaller aircraft.
For the first quarter, China Eastern carried 9 million passengers, up almost 5 per cent from a year earlier, while Air China and China Southern, which also saw traffic slow last month, reported 5.7 per cent and 11.2 per cent growth for the quarter, respectively.
Shares in China Eastern dropped 5.85 per cent to HK$3.22 yesterday after it released worse than expected earnings results on Monday. China Southern shed 3.27 per cent to HK$5.03, while Air China declined 3.3 per cent to HK$5.56.
China Eastern said international passenger traffic in March fell: 4.63%