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COVID-19 and Chinese Aviation Industry

Capacity levels for China’s domestic airlines appear to have bottomed out in mid-February, according to CAPA member itinerary analysis data. In the week beginning Feb. 17, 2020, seat capacity reached its lowest level, with 4.2 million seats, down 71.1% from a year earlier. Schedules submitted to the OAG and related to aircraft configurations in the CAPA fleet database show that airlines have quickly restored nearly 4 million seats per week and will provide about 8.6 million seats this week (the week starting March 16, 2020). That number will rise to more than 10 million seats next week, the week starting March 23, 2020, but it is still about 22 percent below the 2019 level (CAPA, 2020).

China’s international seating capacity appears to have hit bottom during March 9, 2020, dropped 81.0% year on year. It added 20,000 seats in the week of May 17 (down 80.4 % year on year) and is expected to add 100,000 seats next week (from 23 March 2020), a net decrease of 77.8% year on year. Capacity levels in the international market are now expected to be just under 2 million seats a week, down from nearly 2.5 million a week ago. Since May’s Labor Day, airlines have reported more upbeat Numbers, with year-over-year declines of only 12-15%. If that happens — passenger Numbers return to levels consistent with potential capacity growth — that would be a remarkable outcome (CAPA, 2020).

A report on China airport traffic data of Feb 2020 suggests the situation is grim reading. Beijing Capital International Airport reported that passenger traffic fell 86 % to 1.1million during February 2020, with aircraft movements went down by 70.6 %. Passenger traffic at Guangzhou Baiyun international airport dropped 84% to 966,796 passengers by February 2020. Last month, airlines cut capacity to Guangzhou, providing about 3.4 million round-trip seats a month. This equates to a load factor of only 29%. China has experienced an 80-90% drop in passenger traffic and may become the standard for other airports/airlines/countries around the world to enter the blockade incidents (CAPA, 2020).

Share prices of Chinese airlines have been falling since the start of 2020, but not nearly as much as those of international airlines because of strong government support (direct ownership) for the industry. CAAC recorded its biggest monthly loss of $3.5 billion in February 2020, with Air China alone losing $3 billion that month. Hainan Airlines broke the news on February 20, 2020, after news of a possible takeover by the provincial government. But other parts of the industry are also likely to be rationalized as part of the central government’s restructuring of the sector (CAPA, 2020).

With the new policy issued by China makes the aviation industry in China have even lower demand from overseas traveling. Since March 25 Wuhan has no new confirm cases. Additionally, there are no new confirm cases be found from inside of China, all the new 67 confirmed cases are imported from abroad. Therefore China government publish the policy of temporary banning all foreigners but Chinese from entering the country even if they have a visa or resident permits to prevent the inpouring of imported cases from abroad. And international flights have been switched to having only one flight a week with capacity not exceeding 75%. Additionally, all those travelers entering China from abroad will be quarantined for fourteen days and pay all the cost themselves (BBC news, 2020).

Reference

BBC news. (2020). Coronavirus travel: China bars foreign visitors as imported cases rise. Retrieved from http://www.bbc.com/news/world-asia-china-52059085

CAPA. (2020). China aviation & travel looking to turn the corner post-COVID-19. Retrieved from https://centreforaviation.com/analysis/reports/china-aviation–travel-looking-to-turn-the-corner-post-covid-19-517711

Chinese government. (2020). Update on coronavirus outbreak as of 24:00 on 25 March. Retrieved from http://www.gov.cn/fuwu/2020-03/26/content_5495599.htm

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