China Southern Airlines

Airline passenger numbers hit by visa curbs and oil charges

PUBLISHED : Saturday, 23 August, 2008, 12:00am
UPDATED : Saturday, 23 August, 2008, 12:00am

Restrictions on mainland visas and flight cutbacks because of high oil prices have hit China Eastern Airlines and other mainland carriers, which suffered a double-digit drop in international traffic demand last month.

China Eastern reported a 10.6 per cent year-on-year fall in overall passenger numbers last month, the fourth consecutive month of declines for the Shanghai-based carrier.

International passenger numbers shrank 28.8 per cent last month from a year earlier, the largest monthly drop in several years. Domestic passenger traffic fell 7.7 per cent.

The carrier has trimmed international services to Moscow, Paris and Los Angeles to offset the impact of high oil prices.

However, a China Eastern official said those long-haul services would be restored when they could break even. It cut its international services by 22.6 per cent in July.

Adding to the mainland carriers' problems, Beijing tightened visa application processes and increased security measures in the lead-up to the Olympic Games, also hurting international traffic.

Air China, a Beijing-based carrier, earlier reported a 19.4 per cent drop in international passenger numbers last month. China Southern Airlines, the largest mainland carrier, said recently its international traffic dropped 15.3 per cent last month.

Foreign carriers have also been hit by the tightened visa requirements for China. Lufthansa experienced reduced demand on its Beijing route last month because of the visa problem, the airline's senior vice-president Klaus Walther said on Wednesday.

The German carrier said since Beijing's tight controls meant foreign tourists could only obtain single-entry visas instead of multiple-entry visas, traffic demand into the country had been cut.

It said an abrupt rise in hotel rates and ticket prices caused by the Olympics meant that tourists would avoid Beijing for the moment.

In the first seven months of the year, China Eastern flew 21.4 million passengers, 3 per cent less than a year earlier. The percentage of seats sold dropped 0.83 per cent to 71.4 per cent.

The so-called 'Olympic effect', which was expected to be a boon for airlines, turned out to be a mixed blessing. Airlines are hoping for a rebound next quarter, when the effect of the Games fades and domestic traffic demand recovers.

'We believe domestic traffic will recover faster and earlier than international traffic as the negative impact of the Sichuan earthquake lessens during the second half of 2008,' a Daiwa Institute of Research report said.