China’s lunar new year is in mid-February. It is China’s most important holiday. Typically, hundreds of millions of travelers go on the move, heading home for the holiday. For China’s airlines, it’s usually the busiest time of the year. But not this year. On the back of another wave of COVID-19 in China, the 2021 lunar new year looks like being a bust for China’s airlines.
COVID-19 puts brakes on China’s lunar new year
China is recording a couple of hundred COVID-19 cases each day. Those kinds of figures might cause citizens of some countries to go dancing down the street. In China, where they fought so hard to control the virus earlier in 2020, it’s a big deal.
Most of the cities where there are outbreaks are in China’s northeast. Chinese authorities are asking people not to leave their city unless travel is essential. That’s seeing millions of Chinese delay booking air travel or canceling travel already booked. A notice issued by the China Civil Aviation Administration (CAAC) yesterday allows people with travel booked between January 28 and March 8 to access no-cost refunds from China’s airlines easily.
Is the state of domestic flying in China all smoke and mirrors?
Domestic aviation across China was a global bright spot in 2020 – at least on paper. The sector supposedly recovered very strongly in the latter half of 2021. Airline analyst consultancy OAG says over 85 million seats are available in northeast Asia this month, mostly in China. Nine of the top twenty airlines in the world are Chinese airlines. Four of the world’s five busiest airports in the world this month are in China.
But is this all just smoke and mirrors? The Chinese Government owns the bulk of China’s airlines via state-owned enterprises. China’s airlines might be offering frequencies and seats that rival late 2019 levels. But what’s less well known is how many people are traveling on these flights.
CAPA analysis published on their CTC website suggests all is not rosy with China’s airlines. Shanghai-based China Eastern Airlines flew 74.5 million passengers in the 12 months to December 31, 2020. That’s 42.8% down on the previous 12 months. Passenger loads in the 12 months to December 31, 2020, averaged 70.6%, down 11.5% on the previous 12 months.
Beijing-based Air China flew 68.7 million passengers in the 12 months to December 31, 2020, down 40.3% on the previous year. Air China passenger loads across 2020 averaged 70.4%, a decline of 10.6% on the previous 12 months.
CAPA reports Chinese Ministry of Transport data revealing daily passenger movement numbers in China. The most recent data is for January 23. Some 18.8 million people moved around China that day (not all went by air). That figure is down 58.7% compared to January 23, 2019, and down 54.9% compared to January 23, 2020.
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The pain will continue for China’s airlines
What’s the takeout? Perhaps China’s domestic aviation recovery isn’t going as well as many assume. Passenger numbers are way down and staying down. The airlines have clearly adjusted schedules to cater to reduced demand. However, these are big airlines with big fleets and high operating costs. They are collecting ticket revenue in local currency and paying many of their bills in United States currency. The daily cash burn at China’s airlines must be eye-watering.
Millions of Chinese staying put this lunar new year won’t help the situation at China’s airlines. Given it’s the airline’s owners making the stay at home requests, there’s not much China’s airlines can do except grin and bear it.
Do you think the health of China’s domestic aviation sector was over-egged in 2020? Will this year’s lunar new year be a bust for China’s airlines? Post a comment and let us know.