The Chinese Government will provide 11 billion yuan (US$1.64 billion) in grants to three big Chinese airlines and Beijing's Capital Airport in the aftermath of COVID-19 and prolonged lockdowns in China. The largesse comes via the Civil Aviation Administration of China, which posted the news on Wednesday on China's Ministry of Transport website.

Three Chinese airlines benefit from the current round of Chinese Government funding

Air China, China Eastern Airlines, and China Southern Airlines will each collect US$450 million, while Bejing Capital Airport (PEK) will receive $300 million. The grants come as the Civil Aviation Administration of China says the number of commercial passenger flights every day has remained above 10,000 since the start of July, and the overall recovery continues to improve. The Chinese Government, via various proxies, has controlling interests in all three airlines.

According to OAG data, Chinese airlines offered over 15.4 million seats in the week starting July 11. That is marginally up on the same week in 2019. But only 112,597 international seats are available in and out of China this week, a decline of 94.5% compared to the same week last year. OAG says there's been a rollercoaster of capacity changes in China this year as lockdowns and other restrictions come and go. While welcoming the recovery of China's domestic airline market, the OAG analysts reckon there will be more lockdowns in China and more capacity disruptions while that country chases a COVID-zero strategy.

"In the first half of the year, the civil aviation industry was repeatedly hit by the epidemic, and the Civil Aviation Administration coordinated relevant departments to issue relief policies to help enterprises. In terms of financial credit, the Civil Aviation Administration, on the basis of the 65.6 billion yuan ($9.76 billion) in emergency loans for airlines and airports, has also strived for an additional 150 billion yuan ($22.31 billion) in emergency loans for airlines," says a statement from China's Ministry of Transport.

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The statement adds that in the second half of 2022, the Civil Aviation Administration will continue to assist the local aviation industry while actively expanding investment in civil aviation.

China rebounds but could come under challenge

Earlier this year, with rolling lockdowns in some of China's biggest cities, the number of daily flights in China sometimes sunk below 3,000. Song Zhiyong, head of the Civil Aviation Administration of China, admitted recently that Chinese carriers had accrued losses exceeding $44.5 billion since the pandemic's start.

While the Chinese government won't commit to a firm reopening date for the country's borders - and the more pessimistic commentators think China could remain closed until mid-2023, there is a lot of confidence in the long-term viability of China's airline industry. The Chinese Government is pointing to the recent blockbuster Airbus order as proof of that. Airbus itself estimates China will need over 8,400 new planes over the next 20 years.

But outside China, some industry experts suggest India risks overtaking China as Asia's top aviation market. The Indian airline industry is firmly on the rebound, including the international market. There's a view India can play catch up while China dithers on the all-important border reopening and gets its international networks up and running again.