After three years of an aviation industry operating in the red and losses reaching 21.9 billion yuan (US$3.23 billion) according to China Air Transport Association data, Chinese airlines are now looking to add seats to short-and medium-haul routes to Asian destinations rather than loss-making long-haul routes to North America.
With over 800 current international routes in operation, the majority of the planned additional 105 international routes for the new spring season 2020 are to East Asia and Southeast Asia. According to John Grant, senior analyst at aviation data firm OAG: “Chinese carriers are now taking a more commercial approach to international services. If you could fly an aircraft for four hours and stay profitable compared to a 12-hour sector and not make any money, then you could do that thrice on a daily basis, thus making a better business sense.”
China Eastern has just received approvals to open new routes from the tier-two cities of Qingdao and Chengdu to South Korea’s Cheongju-si and to Osaka in Japan, and will additionally fly Shanghai to Aomori Prefecture in Japan and from Xining to Nagoya in Japan. Loong Air received approval in October to open a new route linking Chengdu with Jakarta.
As demand on North American routes weakens, four Chinese airlines have withdrawn six U.S.-bound flights this year, according to aviation data provider Variflight. Air China has suspended Beijing-Hawaii flights, while Xiamen Airlines has suspended its Xiamen-Shenzhen-Seattle service. In general terms, long-haul flights are usually more lucrative for carriers as there is less competition from low-cost carriers experienced on short-haul routes, which means higher fares can compensate up for higher cost of fuel, bigger planes and bigger crews. However, as state and local government subsidy-backed Chinese airlines chased their market share, they drove down long-haul rates so low that they can now make more money on international routes closer to home.
