Exploding Travel Demand... Will Chinese Airlines' 'Deficit Tunnel' Finally End?

Published 20 Apr.2023 09:53(KST)

Travel demand in China is exploding during the Labor Day holiday (April 29 to May 3). Accordingly, the performance of local airlines, which had been mired in deficits during the COVID-19 outbreak period, is also expected to rebound.

On the 20th, China Securities Journal reported that travel demand using flights during the local Labor Day holiday around May 1 is increasing explosively. According to data from Hangban Guanjia, a Chinese airline service app, as of the 18th, orders for international flights and flights to Hong Kong, Macau, and Taiwan during the Labor Day holiday period increased more than tenfold compared to the previous year. The average price of international airline tickets was 4,190 yuan (about 810,000 KRW), down 54.65% from last year. Popular travel destinations included Hong Kong, Macau, Taiwan, Seoul, Osaka, and Bangkok.

[Image source=Yonhap News]

Supply is also on the rise. According to the Civil Aviation Administration of China’s Ministry of Transport, the number of international passenger flights last week (April 10?16) was 2,242 (counting round trips as one flight). Xu Qing, Deputy Director of the Ministry of Transport, emphasized, "We will promptly approve new international flight applications and actively support the difficulties faced by each airline."

For domestic flights, advance bookings have recovered to 2019 levels, and the average price has risen by about 50%. Hangyeo Jonghyeong, an airline ticket booking app, predicted that the total number of domestic flight ticket orders during this year’s Labor Day holiday will increase by 812% compared to the previous year.

The performance of local airlines, which had been trapped in deficits during the COVID-19 outbreak period, is also expected to rebound. The combined losses of three airlines?Air China, China Southern Airlines, and China Eastern Airlines?reached 108.7 billion yuan (about 21 trillion KRW) last year alone. The Securities Journal cited Li Yong, Deputy Director of the Civil Aviation Administration’s Aviation Safety Bureau, saying, "Private airlines will soon be able to maintain a stable recovery trend," and predicted that "the performance of airlines will reach a turning point."