China’s top three carriers see domestic passenger numbers soar in July, pointing to recovery of aviation sector

Name: Chinese airlines offer unlimited flights to coax travellers back as Covid-19 crisis is under control
Uploaded: 2020-08-27T04:23:15.000Z
Duration: 1 min 57 s
Description: Chinese airlines offer unlimited flights to coax travellers back as Covid-19 crisis is under control

Passenger numbers for Air China, China Eastern and China Southern rose about 25 per cent month on month in July as travel within the mainland picked up

The so-called Big 3 flew a total of 22 million passengers domestically last month, more than 500 times as many flown by Hong Kong-based Cathay Pacific

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Bloomberg

Published: 12:23pm, 27 Aug 2020Updated: 4:49pm, 28 Aug 2020

China’s biggest airlines could provide some much-needed encouragement for an aviation industry starved of good news when they report earnings later this week.

While the coronavirus will still likely saddle Air China, China Eastern Airlines and China Southern Airlines with losses for the latest quarter, financial statements from the so-called Big 3 may point to a nascent recovery in air travel thanks to demand in their vast domestic market.

July traffic figures were promising, with passenger numbers for the three airlines rising about 25 per cent from June as travel within China picked up. The trio flew a total of 22 million passengers domestically last month, more than 500 times as many flown by Hong Kong-based Cathay Pacific Airways, which has no home market to fall back on. Revenue passenger kilometres also jumped, though the numbers remain far below a year ago, pre-pandemic.

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Chinese airlines offer unlimited flights to coax travellers back as Covid-19 crisis is under control

After being the first hit by Covid-19, which erupted in Wuhan in January, China is emerging from the crisis; it’s the only major economy on track to expand this year. Businesses have reopened and people are travelling again after the government eased restrictions on movement, including for interprovincial group tours. The FTSE China A 600 Travel & Leisure Index has climbed more than 50 per cent in three months.

Popular Chinese destinations include Jiuzhaigou, famous for its colourful lakes, and Yangshuo and cities such as Chengdu, Shanghai and Beijing. Some places are receiving almost three times the number of visitors than last quarter, HSBC Holdings analysts led by Parash Jain wrote in a note dated August 17, citing Trip.com data. Hotels have also become busier after the curbs were lifted. Occupancy rates in Shanghai reached 65.8 per cent in the August 9-15 week compared with just 6 per cent in February, state-run China Daily reported on Monday, citing the local government.

Chengdu is among the popular travel destinations in China. Photo: Shutterstock Images

“This should boost load factors further and allow airlines to improve yields, a key profit driver,” Jain said, noting that Chinese carriers generate most profit on domestic routes. “Domestic traffic has been consistently showing signs of a recovery, while international traffic has still to take off meaningfully due to hurdles from travel restrictions and quarantine requirements,” he said.

Some carriers including China Eastern have offered ticket deals that allow unlimited flights, sacrificing some of their bottom line to lure customers back. OAG Aviation Worldwide said scheduled capacity in Asia’s biggest economy reached 15.6 million seats this week, only around 8 per cent lower than towards the end of January when the outbreak began. By contrast, US capacity is still down 43.1 per cent from January at 11.8 million seats.