China’s coronavirus strategy deals blow to aviation sector, but could be shot in the arm for home-grown planes
- Domestic passenger traffic in July was still down by 10.6 per cent from the same month in 2019, but up 17.5 per cent from July 2020
- Airlines may be forced to push back the deliveries of new planes from the likes of Boeing and Airbus in favour of China’s ARJ21 and C919 home-grown aircraft
With China intent on sticking with its zero-tolerance coronavirus strategy, the recovery of its domestic aviation industry remains uncertain.
Analysts have said loss-making airlines may be forced to push back the deliveries of new foreign-made planes, meaning China will have to boost production of domestically made aircraft to manage growing costs.
“The outlook for [domestic air travel] is another cautious year, especially with the emergence of highly infectious new Covid variants causing more effects,” said David Yu, professor of finance at New York University Shanghai, who specialises in aviation financing.
“As there are large demand differences between highly flown trunk routes, like Beijing to Shanghai, and lightly flown routes, adverse Covid effects will also be varied.”
Yu added that because excess capacity now exists in the domestic fleet because planes are not flying internationally, it is likely that some deliveries of new planes will be pushed back.