On April 4, 2024, a China Southern Airlines Airbus A321 aircraft was towed away at Singapore Changi Airport.
Sue Edgar | Reuters
China’s three largest state-owned airlines reported third-quarter profits fell despite record summer passenger traffic and fuller planes than last year, as slowing domestic economic growth prompted passengers to seek cheaper fares.
Headquartered in Beijing Air China Quarterly net profit reported on Wednesday was 4.14 billion yuan ($581.34 million), down from 4.24 billion yuan in the same period last year.
China Eastern Airlines Net profit announced on that day was 2.63 billion yuan, a year-on-year decrease of 28.2%.
The country’s largest airline China Southern Airlines It said on Monday that “demand in the aviation market is strong,” but its third-quarter net profit fell 23.9% year-on-year to 3.19 billion yuan.
Airline data show that China Southern’s capacity this season has increased by 11% compared with the same period last year, and the average number of passengers on its planes is also fuller than last summer. However, operating income rose only 4.6% in the quarter, reflecting lower fares.
As the post-pandemic travel boom wanes and most planes return to the skies, global airline demand has been steady but with excess capacity and depressed yields.
China’s capacity has been slower to return to market than the rest of the world as pandemic travel restrictions were lifted in early 2023.
“The significant lag between capacity growth and profit growth suggests that the situation in China is more severe than the economic slowdown experienced elsewhere,” aviation data and consulting firm Ishka said in a recent report.
Despite Beijing’s efforts to boost economic growth through stimulus packages, Chinese consumers are holding back on spending as the housing crisis continues to spread and youth unemployment remains high.
“China’s economic slowdown has not spared airlines, even if they take advantage of the continued recovery in capacity after the epidemic to at least get rid of the unsustainable losses suffered during the impact of the epidemic,” Ishka wrote.
FlightMaster, a Chinese aviation data company, said that in July and August, average domestic air ticket prices in China fell 17% from last year and 1% from 2019 levels.
FlightMaster said international fares are 25% lower than last summer and 12% lower than in 2019.
ForwardKeys, another aviation data company, said outbound air tickets from China fell 39% from January to September compared with the same period last year.
The three major airlines posted their first quarterly profits since 2019 during the busy summer months of last year’s third quarter, only to fall back into the red during the slow winter flight season that began this week.
China’s aviation regulator said in September that passenger numbers in July and August were up 12% from the same period last year and 18% above pre-COVID-19 levels.
China’s largest private low-cost airline Spring AirlinesAfter the epidemic, it returned to profitability earlier than its full-service competitors China Southern Airlines, China Eastern Airlines and Air China.
On Wednesday, Spring reported a 32.4% annual drop in net profit to 1.2 billion yuan.
