Travelers jetting between Honolulu and Beijing will soon be without a nonstop service following Air China’s decision to scrap its thrice-weekly flights later this month. It follows Hawaiian’s decision to “suspend” their services on the route in 2018.
Flight Global is reporting that Air China’s last flight to Honolulu will be on August 27th, 2019. The Beijing based airline is putting the withdrawal down to “network distribution and capacity arrangements”.
It will leave China Eastern as the only carrier offering nonstop services between China and Hawaii. China Eastern currently scoots between Shanghai (PVG) and Honolulu six times a week using an A330-300.
Why would Air China scrap its Honolulu flights?
There are a few ways to look at this decision.
Firstly, it’s a backward step, given the rise of Chinese outbound tourism and the expectation that, in the future, China will be a key tourism market for Hawaii. But weak loads on the Air China Honolulu flights (just 66% in 2018) suggest that there is still some way to go to realize that ambition.
Secondly, there is some commentary that the cessation of the Air China flights is a byproduct of the US-China trade disputes. But more considered analysts believe this is unlikely and merely a coincidence of timing.
Will Horton, writing for Forbes, suggests Air China pulling out of Hawaii makes good business sense. He argues the airline is maturing and making better strategic decisions after years of dumping capacity on routes that don’t always perform well.
Sound reasoning behind the decision?
The Hawaii flights were the worst-performing of Air China’s US flights. Passenger loads of 66% into Honolulu compared unfavorably with loads of 81% for Beijing-JFK flights and 83% for Beijing-LAX flights. Air China averages a passenger load of 78% across all its international flights.
Further, capacity is restricted between the United States and China. There is a limited pool of US flights available from key Chinese cities such as Beijing and Air China was effectively squandering one of those limited flights on an underperforming route.
The Honolulu flights had to be financially sustainable in their own right. There are no subsidies available for flying out of Beijing. The Chinese Government is known to incentivize Chinese airlines to fly out of secondary Chinese ports. Local city governments in China can also offer incentives. No such financial incentives are available at crowded Beijing.
Forbes also makes the point that, right now, Hawaii isn’t a big drawcard in Asia – Japan and Korea aside. Hawaii tourism authorities see a bright future in inbound Chinese tourism, but that future is yet to dawn.
The complex visa application process also a barrier to growth
A significant obstacle to inbound leisure-oriented tourism in any market is a complex visa system. The complexities and rigors of the US visa system are well known and will always act as a barrier to tourism growth.
While you could argue that ETSA is merely an electronic visa, its operation under the so-called Visa Waiver Program (VWP) does make traveling to the United States that much easier. Until China can access the VWP or something akin to it, inbound Chinese tourism into the United States will never take off.
The current antagonism between the US and Chinese Governments makes that unlikely to happen at any time in the near future.
And in tourism dependant markets like Hawaii, it’s where the impact will be felt most.