Airlines including British Airways, Qantas and Finnair are reducing flights to China.
Nicola Economu | Noor Photos | Getty Images
Major global airlines are reducing services and in some cases withdrawing from China entirely as longer routes to Asia following the closure of Russian airspace increase operating costs while demand is low.
Virgin Atlantic and SAS, for example, have their websites showing that they are exiting China entirely. virgin airways Stop all flights to Hong Kong It will close its office there in 2022, ending the airline’s 30-year history in Asia’s financial hub.
one Report from travel news website Skift Data shows seven major airlines have pulled out of the country in the past four months.
John Grant, chief analyst at aviation intelligence firm OAG, said the situation “will become more pronounced before it gets better.”
Grant said British Airways has gradually reduced the size of its aircraft to China. He said routes operated by Boeing 747 jumbo jets had been replaced by B777s and eventually the smaller B787s. Skift said it’s another way to reduce capacity, but it “preserves spots” on the airline’s route map.
Frankly, it’s a no-brainer.
John Grant
Chief Analyst at OAG
Reason for retreat
After Russia invaded Ukraine, the EU and Britain and other Western countries imposed Total flight ban on Russian aircraft. Russia responded in kind, closing its airspace and forcing many European airlines to fly long-haul routes to Asia.
Longer flights require more fuel, which makes flights more expensive. However, Chinese airlines are exempt from the Russian airspace ban, so they can fly to Europe faster and cheaper than their European counterparts.
Three days after Russia invaded Ukraine, Finnair announced that it would extend flight times to major Asian cities including Tokyo, Shanghai, Seoul, Bangkok, Delhi and Singapore. The airline will reduce flights to China this winter while increasing flights to Thailand.
Aaron Pu/Bauer-Griffin | Gas Chromatography | Getty Images
Additionally, “because of the extended flight times, airlines are having to operate four crew members when in some cases they could use two or three crew members,” Grant said. “That’s an expense when crews are short and their hours are limited.”
Grant said European airlines have found better uses for aircraft deployed to China.
For example, when British Airways canceled its route to Beijing, it reallocated its planes to Cape Town, he said. He said the “load factor” – the number of passengers a plane carries – jumped from 55 per cent on the Beijing route to 90 per cent on the Cape Town route.
low demand
As major airlines withdraw from China, Some companies are adding capacity to other parts of Asiashowing that the Russian airspace issue itself is not a deal-breaker.
Grant said the need to move in and out of China is another major issue. China’s economic problems have hampered outbound travel, while sluggish international interest in visiting China has also curbed inbound tourists.
Before the outbreak of the epidemic in 2019, China received approximately 49.1 million tourists; About 17.25 million foreigners entered the country As of July this year, the project was listed in China, according to the Chinese government.
Qantas cited “low demand” when it announced it was canceling flights from Sydney to Shanghai in May. Australia’s national airline still flies to Hong Kong from Sydney, Melbourne, Brisbane and Perth.
U.S. airlines have not been hit hard by the Russian airspace issues, but they are retreating, Grant said.
“The reality is that U.S. airlines are making the difficult but very business-like decision to drop service to China and redeploy aircraft elsewhere,” he said. “Frankly, that’s a given and a reflection of the market. “
“American Airlines has no real interest in doing anything more than it currently is,” he said. “It’s almost like they’ve been insisting on the frequency that they have to ensure that when China comes back they have a seat in the market and aren’t blocked by the Chinese saying there’s no room – they’ve done that before.”
CNBC reached out to Chinese aviation officials for comment but did not receive a response.
China Airlines’ struggles
Sluggish demand is also plaguing China’s domestic airlines.
Grant said China Airlines will recover, but only in the long term. “But when their largest airline loses $4.8 billion in 2022 and ‘only’ lost $420 million last year, while all major international legacy airlines are profitable, they still have a long way to go.”
He said that this winter, Chinese airlines will operate 82% of all flights between China and Europe, up from 56% before the epidemic. Grant said that overall, Chinese airlines have increased capacity to Europe compared with pre-pandemic times, even though markets and trade flows were much stronger at the time.
A screenshot of flights on October 26 on the Lufthansa website shows that all direct flights from Frankfurt to Beijing are operated by Air China.
CNBC
“Chinese airlines are desperate for cash and want people to see them returning to ‘normal’,” he said.
Grant said more flights are on the way.
“There are going to be about 18 new routes between China and Europe this winter … all of them from Chinese airlines,” Grant said. “It’s crazy – there’s no real demand.”
