China’s Domestic Market Continues To Show A Strong Recovery

China’s domestic airline market continues to rebound from 2020. Since the beginning of March, the number of domestic flights operated has exceeded not only 2020 levels, but 2019 levels. It marks a fast rebound from a flat Lunar New Year in February when the Chinese Government actively discouraged domestic travel and airline traffic plummeted.

China’s daily domestic flights now above 12,500

According to the flight-tracking website, RadarBox.com, China is now seeing more than 12,500 domestic flights a day. Across the last week of April, the seven-day average is 12,612 daily flights. In the same week last year, the seven-day average was 4,939 daily flights. In 2019, the seven-day average was 9,949 daily flights.

The rebound is all the more remarkable because, during the recent Lunar New Year, average daily flights fell to less than 5,000.  The rebound in China is fuelled by vaccination rollouts, testing regimes, the easing of quarantine and travel restrictions, and a growing public sentiment that it is safe to travel again.

United States reassumes the mantle of world’s busiest domestic airline market

According to OAG data, three of the world’s ten busiest domestic airline routes in April 2021 are in China. The sector between Beijing and Shanghai Hongqiao is the world’s third busiest domestic route this month and expected to convey 754,778 passengers.

The fifth busiest domestic route is between Guangzhou and Shanghai Hongqiao, with 634,916 passengers expected to fly in April. Taking out the 8th spot is the Shenzhen and Shanghai Hongqiao run, anticipated to carry 582,534 passengers in April.

Making life easier for airlines are the improving load factors and rising ticket prices. Until recently, domestic capacity far exceeded demand, a fact acknowledged by China Southern Airlines executive Guoxiang Wu at a CAPA Live event.

Analysis from mid-April also published by CAPA suggests average airfares have recovered to 96% of 2019 levels. Passenger load factors were running at 73% earlier in April. Barring any further upsets, airfares and passenger loads should continue to recover this year.

For much of 2020, domestic airline activity in China knocked the United States from its usual mantle of being the busiest domestic airline market in the world. But the United States has also experienced a swift turnaround in flying activity this year. The United States has safely reassumed its commanding position as the world’s busiest domestic airline market.

Chinese domestic travel recovers, international flying stagnates

In many ways, both the United States and China highlight the diverging paths the world’s airline markets are taking. Some, with recovering domestic markets, are rebounding nicely. Others, with no domestic markets or stagnant domestic markets, are not faring so well.

China is firmly in the former camp. And that’s good news for China’s airlines, or at least China’s airlines that stay close to home. While domestic travel has largely recovered and domestic airlines are benefiting from that, international travel in and out of China remains in the doldrums, adversely impacting Chinese airlines with extensive international networks.

Those impacted airlines include the big names in Chinese aviation – Air China, China Eastern Airlines, and China Southern Airlines. Last month, these three airlines each posted multi-billion losses for calendar 2020. Domestic passenger numbers across these three airlines were down an average of 27.3% in 2020. International passenger numbers collapsed by more than 80% across the three airlines.

Domestic traffic may have recovered, but these three flagship airlines of Chinese aviation remain heavily exposed to further financial pain while international travel remains curtailed.