Spring Airlines, China's biggest carrier outside government control, is considering ending flights to Japan after a territorial dispute between the Asian countries last year emptied planes and caused losses.
Spring Air has not decided on the 12 weekly flights between China and Japan, chairman Wang Zhenghua said, adding his "Japanese friends" were asking him to continue.
Shanghai-based Spring Air has put on hold plans to add more Japan services as it is filling less than 50 per cent of the seats on those flights, compared with an average 92 per cent occupancy on other sectors.
While Japan is only 2 per cent of the airline's capacity, the Chinese carrier had planned to make the nation its biggest overseas hub, Wang said.
The closely held airline was relying on setting up foreign bases in Hong Kong and South Korea to fuel its expansion amid competition with three large, government-controlled carriers in the domestic market.
"We've never had such empty flights in Spring Air's history," Wang said. "The political limbo is giving us a tough time, as we don't know when the market can recover. I hope the tensions can be eased as soon as possible."
The decades-long territorial dispute over Diaoyu Islands was reignited last year when Tokyo bought the islets, escalating tensions between the two nations and sparking violent protests across China.