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China’s domestic aviation recovery stalling says global airline association
April 24th 2020
International Air Transport Association [IATA] chief economist, Brian Pearce, said this week the recovery in China's domestic market had stalled at about 45% of normal capacity because of lack of demand from leisure travellers. Read More »
Chinese carriers began rebuilding their domestic networks in late February after government restrictions on the movement of people began to be eased in some parts of the country as the number of new cases of the virus slowed to a trickle.
The change in policy allowed airlines to re-introduce some of the domestic flights suspended at the height of the Mainland's coronavirus outbreak.
Figures from IATA published this week showed that after an early surge in demand, the amount of capacity had held steady and was still less than half it was in normal times.
Pearce said one of the key triggers for the initial domestic aviation recovery was the restarting of business. Figures from China indicated manufacturing was "pretty much back to normal", he said.
"Businesses in China are genuinely feeling a lot more confident than they had been at the depths of the crisis. I think this is the important reason for some of the recovery in domestic markets we have seen in China," Pearce said during a conference call with reporters this week.
While those travelling for work and visiting friends and relatives were, to some extent, back travelling again, Pearce said consumers remained cautious and business confidence was still below levels recorded before the coronavirus pandemic. This explained the plateauing of the Chinese domestic market after that initial return to work.
"We have not seen the recovery of leisure," Pearce said. "We need to see an improvement in confidence to achieve a fuller recovery. Those are the lessons from the Chinese experience."
An IATA survey of recent travellers from 11 countries found 69% of respondents indicated they could delay a return to travel until their financial situation stabilised.
The survey highlighted the need for "confidence-building measures" to deal with a "slower recovery than we had previously anticipated", IATA said.
"Once market travel restrictions and the lockdowns are relaxed, there is still an issue. Will there be the demand from travellers to fly," Pearce asked.
"The economic environment we are expecting in the next six months is not really conducive to any substantial return to air travel for financial reasons."
Additionally, airlines' ability to ride out the crisis would be challenged by proposed social distancing rules on board including blocking the middle seat to add more space between passengers.
IATA director general and CEO, Alexandre de Juniac, said these rules could leave up to a third of seats unsold.
"Either you fly at the same price – it's like selling the ticket at the same average price as before COVID-19 – and you lose enormous amounts of money. If that is the case, it is impossible to fly for any airline and particularly low-cost," de Juniac said.
"Or you increase the ticket price for similar travel by at least 50%. And then you are able to fly with a minimum profit.
"If social distancing is imposed [on airlines] cheap travel is over for a while."
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