China Will Offer Airlines Subsidies As Virus Crisis Drags On

In an attempt to reboot the aviation industry and boost the economy, the Chinese government has announced it will provide financial support to airlines. The Civil Aviation Administration of China (CAAC) is hoping to reinvigorate the nation as the coronavirus continues to impact industries. But is this idea as good as it sounds? Perhaps not.

Juneyao and China Airlines
Since the start of the outbreak, passenger numbers through China have plummeted. Photo: Getty Images

Financial motivation

China has announced it will offer subsidiaries to airlines if they start flying to China again. With the outbreak of the coronavirus, many airlines around the world have curbed or canceled flights to mainland China for fear of spreading the disease.

According to Cirium, 347,414 flights were canceled between the 24th of January to the 27th of February. This number is rising as the outbreak continues. But as the number of new cases of the virus appears to be stabilizing, airlines are looking to minimize financial damage.

China Eastern coronavirus getty images
China Eastern is one of the airlines which has been hit worst by the virus outbreak. Photo: Getty Images

For those airlines which are hesitant, China is willing to provide financial motivation. China has said it will pay 0.0176 yuan ($0.0025) per seat per kilometer for any airline which reopens routes that are shared by multiple carriers. This number jumps up to 0.0528 yuan ($0.0076) for any carrier willing to open a route which they alone operate.

The financial subsidies will apply retrospectively for all flights from the 30th of January and will continue until the 30th of June. Clearly, the Chinese government is hoping that by summer, everything will be back to normal.

Recovering from the virus

Businesses in China have started to go back to work as the virus slows. This means flights both to and from the mainland are needed to provide supplies, move products and bring in people.

Perhaps the only real positive to have come from the halt in China’s busy economy is the effect this has had on the environment. Not only are their fewer emissions from the aviation industry and the entire transport sector as well as factory output and energy consumption.

empty seats coronavirus getty images
With so few people willing to travel, it may not be worth airlines starting flights just yet. Photo: Getty Images

CNBC is reporting that coal consumption at Chinese powerplants dropped by over 40% compared to last year. Additionally, pollution levels have dropped by over 20%. So as the world’s largest economy gears up again, the eyes of the environmentally-conscious will be back on China.

The environment vs the economy vs the virus

While many airlines are likely to take the Chinese up on their offer, some are questioning if this is happening too soon. There is the potential that some airlines will fly almost empty aircraft just to get the compensation.

If this happens then the environmental footprint of flights would be significantly higher than usual when compared to the number of actual passengers. While the virus is not spreading as quickly as before, it is still causing problems around the rest of the world.

The government may be keen to boost its flagging economy but it may find airlines taking advantage of its offer. In these cases, the government may be criticized for sacrificing health and safety as well as the environment.

Perhaps the government should specify that airlines only qualify for financial help if the flights reach a minimum capacity. It also hasn’t announced if there will be any medical checks enforced on passengers traveling to and from the country.

What do you think of the new scheme to encourage airlines to fly again? Is it a good idea? Is it too soon to think about this? We’d love to know your thoughts in the comments.