Comment
A casualty of war
August 1st 2024
China has long been a critical market for Asia-Pacific, European and North American airlines. Read More » Before the onset of the pandemic, the expansion of China air travel was an important contributor to non-Chinese airline revenue. Unfortunately, this market is changing dramatically.
We know a major reason for the re-shaping of the Asia airline landscape, particularly in North Asia, is the closure of Russian airspace to most Western airlines. Being forced to fly up to two hours longer between China and Europe, coupled with low demand from Mainland travellers, is making flights between Europe and China uneconomic.
Airline industry leaders, among them Qantas Airways, Virgin Atlantic, British Airways and United Airlines either have pulled out of China or reduced their networks into the country. On the other hand, their Chinese rivals are expanding, increasing services to Europe and North America because they can use Russian airspace, saving up to 30% in operating costs compared with their international competitors.
Why would a Chinese traveller fly on a Western airline when a Chinese carrier offers a shorter journey at a cheaper price? The result? To date in 2024, China’s seat capacity to inter-continental markets is 74% of 2019 levels, according to OAG data. Mainland airlines are offering up to 88% of their 2019 output to the market while foreign airlines are supplying 55%.At press time, China’s airlines had increased their share of the home market from 58% to 68%.
Capacity of all U.S. and Canadian carriers into China is now 22% of pre-pandemic 2019. China it is not entirely back to 2019 levels, but it is getting there rapidly.
Closure of Russian airspace is not the only reason for these changes in the market, but it is the major one. As long as the Russia-Ukraine war lasts, Western airlines with ambitions to expand their Mainland market share will continue be the losers.
TOM BALLANTYNE
Associate editor and chief correspondent
Orient Aviation Media Group
