Short-term setbacks cannot hide growth momentum in China’s aviation market

Staff at Haikou Meilan International Airport carry out disinfection operations at the check-in counter on August 7. Photo: cnsphoto

A new outbreak of COVID-19 infections has cast a shadow over China’s aviation industry. As of Thursday, China had designated 139 medium-risk areas and 27 high-risk areas based on the number of new infections, and several airports including Nanjing, Yangzhou, east China’s Jiangsu province had been closed, forcing airlines to cancel a large number of flights due to travel restrictions across the country.

Will the new wave of the epidemic cause heavy losses to the aviation industry?

The cancellation of a large number of flights has become the most visible manifestation of the impact caused by the epidemic, with Nanjing Lukou International Airport and Yangzhou Taizhou International Airport temporarily suspending operations.

According to statistics from information provider VariFlight, 27 domestic airports with 10 million passenger trips canceled more than 10,000 flights on Aug. 6, among them Nanjing Lukou Airport having seen no inbound or outbound flights since August. July 26, while Zhengzhou Xinzheng Airport and Xiamen Gaoqi Airport canceled more than 80% of scheduled flights.

The dynamic situation affected the results of major Chinese commercial carriers.

According to qunar.com, refund requests through the platform on August 4 reached 10 times the usual number, more than the traffic during the 2021 Spring Festival holiday, which represents a huge blow to the cash flow of companies. Airlines companies.

In order to prevent and control the spread of the epidemic, more than 30 provinces have issued reminders to travelers suggesting not to leave the province or city unless necessary or to reduce travel between provinces or cities, a measure which further dampened airline demand, ending the summer travel season prematurely. In other words, the travel and tourism sector faces another year of record low income.

Although the epidemic will harm the airline industry in the short term, it will not cause permanent damage to China’s civil aviation.

According to public information, civil aviation and China’s disease control system have put in place state-of-the-art preventive measures, with a record deployment of vaccines providing the industry with increased long-term certainty. It is believed that the civil aviation market will gradually return to normal during the second half of August.

The civil aviation industry, which is undergoing a profound transformation unprecedented for a century, will face the uncertainty of the external environment for the foreseeable future. It requires the industry to strengthen the management of risk awareness, maintain stable development while seizing strategic opportunities, to improve the construction of emergency response systems, establish coordination mechanisms for emergency and measures to deal with major public health events.

At the same time, airlines can take full advantage of the strategic opportunity period to accelerate their digitalization process, including creating a new civil aviation service experience through cutting-edge technology and promoting new intelligent technologies and applications such as facial recognition, to improve industry competitiveness and better meet people’s needs for a better life.

Data from the International Air Transport Association (IATA) showed airlines around the world lost more than $126 billion in 2020 due to the impact of the outbreak on air travel demand. IATA figures indicate the decline peaked in 2020 since it began tracking global air passenger demand in 1950, with industry-wide air passenger demand falling by 65.9 % year-on-year from 2019 levels, while international air passenger demand, which was most significantly affected, fell 75.6%.

Graphics: GT

The global airline industry made 4.5 billion passenger trips in 2019, but only 1.8 billion in 2020, according to a previous report by Cirium, an aviation data analytics company. Additionally, air passenger traffic in 2020 fell to that of 1999, in other words, 21 years of industry growth was offset due to the outbreak, IATA said in its report.

Due to the strict immigration controls still in place in many countries, coupled with the call to stay at home and go out as little as possible during the epidemic, a large number of international and domestic flights have been canceled or have greatly reduced their frequency. For example, at the height of the epidemic in China in the first half of last year, the number of flights on the Beijing-Shanghai route, which usually accounts for more than 60 pairs of flights per day, was reduced to one tenth. of this volume, while the number of flights on the trans-Pacific and trans-Atlantic routes has been reduced to a minimum.

However, China became the largest domestic aviation market for the first time in 2020, due to a rapid rebound in the domestic aviation market after the COVID-19 outbreak was brought under control.

IATA released a report suggesting that the top five domestic routes with the highest global passenger traffic in 2020 are all in Asia, including three routes in China: Shanghai Hongqiao-Shenzhen, Beijing Capital-Shanghai Hongqiao and Guangzhou- Shanghai Hongqiao.

Qingdao Jiaodong International Airport on Thursday officially implemented the transfer of operations, designed to operate at the same level as Beijing Daxing International Airport and Shanghai Pudong International Airport, both of which are the highest class 4F high level of national civil aviation. The airport, located in eastern China’s Shandong province, is one of the first 18 “smart airport” demonstration projects. It is expected that by 2025, the airport will be able to handle 35 million passengers, 500,000 tons of cargo and mail and 300,000 aircraft movements each year.

Airbus delivered 47 planes to 32 global customers, including Chinese airlines, including China Southern Airlines, Air China and Shenzhen Airlines all received their planes in July, a vote of confidence in the Chinese airline industry.

However, Chinese airlines will continue to face the impact of declining passenger traffic caused by the tightening of epidemic prevention policies whenever and wherever new outbreaks occur.