By: APA/Reuters
After more than two years of war in Ukraine, the associated closure of airspace over Russia is having a noticeable impact on Western airlines. Their range of flights to China is being thinned out, while competitors from China and the Arabian Gulf are gaining market share. Industry data shows that the major Chinese airlines have reached 90 percent of their international flights compared to the pre-Corona year of 2019, while Western airlines have only reached 60 percent.
British Airways recently announced that it would no longer fly from London to Beijing for a year starting at the end of October. At Lufthansa, the low profitability of flights to China was one of several reasons for a weak first half of the year. Other airlines report continued low demand in the West for trips to China.
The reason for this is the higher costs due to longer flight times if Russian airspace has to be avoided. On the London-Beijing route, for example, this amounts to almost two and a half hours. China Southern, for example, takes the direct route, even though missiles and drones are flying lower down in the airspace between Ukraine and Russia. The airline has been offering the connection since last year. In addition, demand for flights between China and the West has only recovered slowly since the end of the corona pandemic. In July, there were 23 percent fewer flights from China than in the same month in 2019, according to data from Cirium.
“China is very difficult at the moment because the Chinese carriers are throwing so much capacity onto the market,” explained Lufthansa CEO Carsten Spohr in June at the Stuttgart Business Press Club. The margin is “not that great.” This summer, Lufthansa has 35 weekly frequencies from Munich and Frankfurt to Beijing, Shanghai and Hong Kong, 66 percent of the volume of 2019 in its program. The increased offering at Lufthansa, as well as at other airlines, is pushing down ticket prices. At Germany’s largest airport, Frankfurt, connections to China with 57 weekly frequencies are still 17 percent below pre-crisis levels, according to operator Fraport.
Meanwhile, the share of international flights to and from China operated by Chinese airlines is higher than before the Corona crisis and continues to rise. In addition to shorter routes, they have other advantages: “Chinese airlines typically have up to 30 percent lower costs than their international competitors,” explains John Grant, travel data expert at OAG.
Chinese airlines such as China Southern, China Eastern and Air China, which also fly to Frankfurt, operated 90 percent of international flights last month compared to July 2019, according to Cirium flight schedule data analyzed by Reuters. Foreign airlines only operated 60 percent of pre-pandemic flights, indicating a decline. Australian airline Qantas justified the suspension of Sydney-Shanghai flights in July with half-empty planes and low demand for travel to China. Before the Corona crisis, the brisk business travel between Europe and China was a lucrative business for Lufthansa & Co with business class customers in a small market for private vacation travel.
For example, the only nonstop flights between Mexico and China are operated by Chinese airlines after Aeromexico failed to resume services following the pandemic. In the Middle East, where China is expanding its ties, Dubai-based Emirates has fully restored capacity to China, Kuwait Airways has increased frequencies and Bahrain-based Gulf Air launched flights to two Chinese cities for the first time in May.
Only a fifth of the flights from 2019 are flying between the USA and China. The bilateral air transport agreement between the two economic powers involved in the trade dispute was suspended in 2020. Flight permits are gradually being increased again. US airlines are not using the permitted round-trip flights of 35 per week, while Chinese airlines have already increased to 49 per week. United Airlines pointed to a “dramatic” drop in demand. Unions and airlines in the USA are watching the trend with concern and accusing the government in Beijing of anti-competitive policies. In April, they warned in a letter to the government: “If the growth of the Chinese air transport market continues unchecked, flights will continue to be awarded to Chinese airlines.”
