British Airlines, Qantas and Finnair are a number of the airlines which are reducing services to China.
Nicola Economou | Nurphoto | Getty Images
Major global airlines are reducing services and, in some instances, withdrawing from China altogether as longer routes to Asia following the closure of Russian airspace have raised operational costs, while demand has been low.
Virgin Atlantic and Scandinavian Airlines, for example, are completely withdrawing from China, the businesses’ web sites show. Virgin Atlantic ceased all flights to Hong Kong — and closed an office there — in 2022, ending the airline’s 30-year presence within the Asian financial hub.
A report from travel news site Skift shows that seven major airlines have retreated from the country up to now 4 months.
John Grant, chief analyst on the aviation intelligence company OAG, said the situation is “going to get more pronounced, before it gets any higher.”
British Airlines has steadily downgraded the dimensions of jets it flies into China, said Grant. Routes that were flying Boeing 747 jumbo jets, were replaced by B777s and eventually even smaller B787s, he said. That is one other technique to cut back capability, yet it “retains the dot” on an airline route map, said Skift.
It’s a no brainer, quite frankly.
John Grant
chief analyst at OAG
Rising costs
Following Russia’s invasion of Ukraine, the EU and the UK, together with other Western nations, imposed a blanket flight ban on Russian aircraft. Russia responded in kind by closing its airspace, forcing many European carriers to fly longer routes to succeed in Asia.
Longer flights require more fuel, which make flights costlier. Chinese airlines, nevertheless, will not be subject to Russian airspace prohibitions, so that they can fly the identical routes into Europe faster and cheaper than their European counterparts.
Moreover, “airlines have needed to operate with four-man flight crews due to prolonged hours when, in some cases, they might have used a two- or three-man crew,” said Grant. “When flight crew are short and hours limited, that is an expense.”
Three days after Russia invaded Ukraine, Finnair announced that flights to major Asian cities — Tokyo, Shanghai, Seoul, Bangkok, Delhi and Singapore — can be longer. The airline is reducing services to China this winter, while adding flights to Thailand.
Aaronp/bauer-griffin | Gc Images | Getty Images
Grant said European carriers have found higher uses for aircraft that were deployed to China.
For instance, when British Airlines dropped its Beijing route, it reallocated the planes to Cape Town, he said. “Load aspects” — how full the plane is — jumped from 55% on the Beijing route, to 90% on Cape Town services, he said.
Lower demand
As major carriers pull back from China, some are adding capability to other parts of Asia, showing the Russia airspace problem is not a deal-breaker unto itself.
Demand out and in of China is one other major issue, said Grant. The country’s economic problems thwart outbound travel, while lackluster international interest to visiting China is dampening inbound arrivals.
In pre-pandemic 2019, China welcomed some 49.1 million travelers, while around 17.25 million foreigners had arrived in China this 12 months as of July, in keeping with the Chinese government.
Qantas cited “low demand” when it announced it was canceling Sydney to Shanghai services in May. Australia’s state flag carrier still flies from Sydney, Melbourne, Brisbane and Perth to Hong Kong.
U.S. airlines have not been hit as hard by the Russian airspace issue, but they too are retreating, said Grant.
“Indeed U.S. carriers are making hard but very business decisions to drop Chinese services and redeploy the aircraft elsewhere,” he said. “It’s a no brainer, quite frankly and a mirrored image of the market.”
“U.S. carriers don’t have any real interest in doing anything greater than they’re in the intervening time,” he said. “It’s almost as if they’re hanging on to the frequencies they need to ensure when China comes back that they’ve a presence available in the market, and will not be blocked out by the Chinese saying no slots can be found — they’ve done that before.”
CNBC reached out to Chinese aviation officials for comment, but didn’t receive a response.
China airlines’ struggle
Low demand has also plagued domestic airlines in China.
Grant said that China airlines will get well, but only over the long term. “But when its largest airline lost US$4.8 billion in 2022 and last 12 months ‘only’ US$420 million, when all major international legacy airlines were profitable, they’ve a protracted technique to go.”
This winter, China-based carriers will operate 82% of all flights between China and Europe, up from 56% before the pandemic, he said. Collectively, Chinese airlines have increased capability to Europe, in comparison with pre-pandemic, though the market and trade flows were much stronger then, said Grant.
A screenshot from Lufthansa’s website for flights on Oct. 26 show all non-stop flights from Frankfurt to Beijing are operated by Air China.
CNBC
“Chinese carriers are desperate for hard money and to be seen to be returning to normal,” he said.
And, more flights are on the best way, said Grant.
“This coming winter there shall be some 18 latest routes between China and Europe … all of that are from Chinese airlines,” said Grant. “It’s madness — there isn’t any real demand.”
