Air travel demand has started to recover on routes between China and Japan after previously being hammered because of the territorial dispute between the two countries.
"Demand from business class passengers is coming back to the level before [the disputes happened]," said Shinichiro Ito, the president and chief executive of All Nippon Airways. "Sooner or later, a full recovery will come, probably next year."
However, leisure travel still had not shown signs of recovery as tourists would rather delay their trips until the tension subsided, Ito said.
"We forecast that December's passenger volume will swing back to as much as 80 per cent of the level in the same period last year," he said.
ANA found passenger volume on the mainland and Hong Kong shrank 26 per cent year on year last month, followed by a 25 per cent fall this month.
At the peak of the anti-Japanese sentiment in mainland China, about 40,000 seat reservations were cancelled on flights operated by ANA between the two countries from September to this month.
Interestingly, while passenger business has been hit, cargo demand between the two countries remains robust. ANA said it would upgrade the service between Osaka and Tsingtao by replacing Boeing 737s with B767s. The bigger aircraft could provide more cargo space at the bottom of the aircraft, or the so-called belly hold, to meet cargo demand, a spokesman said.
A recovery in demand for mainland carriers, however, had yet to occur because of their high exposure to leisure passengers, said Davin Wu, a transport analyst at Credit Suisse.
In a visit by analysts to Air China and China Eastern Airlines last week, the management of both carriers said they had not seen any pickup on the routes in the fourth quarter.
Mainland carriers cut their seat capacities on Japanese routes by 18 per cent last month. Load factors - the percentage of seats sold - dropped to 55 per cent from 80 per cent before the tension.
In response to the drop in demand, ANA also downgraded one of its two daily flights between Narita and Beijing to a 120-seat B737 from a 214-seat B767. The same arrangement was adopted on the Kansai-Shanghai route, with one daily flight using a B767 instead of a 306-seat B777. The number of seats is down 15 per cent this month from the level in August.
Shanghai-based low-cost carrier Spring Airlines, which operates three routes to secondary cities in Japan from Shanghai, is hoping demand for leisure travel will rebound in the longer term.
"We will continue to open new routes to Japan and other international destinations in the region," chairman Wang Zhanghua said.