22 March 2019

US routes open new skies for Chinese carriers

Flights between China and the United States are cash cows for some US airlines. A senior executive from one American carrier was quoted as saying that revenues from a China-US route are three times those from a US domestic one.

The growing number of big-spending Chinese tourists flocking to overseas destinations like the US has given a crucial lift to American carriers, which dominate the airways between the world’s two largest economies.

Consulting firm PricewaterhouseCoopers estimates that US airlines command a combined market share of more than 53 percent of air passenger traffic between the two countries. The International Air Transport Association (IATA) said US carriers accounted for 47 percent of all passenger trips in the first three quarters, while Chinese carriers had 35 percent and the remaining 18 percent was divided among Hong Kong, Japan and South Korea operators.

Yet the landscape is about to change with several Chinese firms waiting in the wings for a dogfight over the burgeoning market. This comes as the US and some other countries prepare to gradually lower visa requirements for Chinese citizens to help spur demand in the air industry. Official statistics show the number of Chinese visitors heading for the US will near the 1.7 million-mark this year.

Chinese airlines aim to make the most of this by kick-starting new US routes and strengthening existing ones. China Eastern (00670.HK, 600115.CN) launched direct flights from Shanghai to San Francisco in April, the firm’s fourth US route on top of those serving New York, Los Angeles and Hawaii. Air China (00753.HK, 601111.CN) and China Southern (01055.HK, 600029.CN) have also stepped up services.

IATA data show that Chinese firms altogether provide 41.5 percent of total available seat kilometers on China-US flights in the first three quarters, up 4.7 percentage points from a year earlier.

Apart from the “big three” state-owned carriers, Hainan Airlines (HNA, 600221.CN) is also charting new territory between America and China. US routes served as the firm’s springboard for international expansion, starting with a Beijing-Seattle route launched in 2008 that has reportedly clocked up a 90 percent occupancy rate this year.

HNA launched two weekly services between Beijing and Chicago in September and robust demand has prompted it to double that to four flights a week this month using its brand new Boeing 787 Dreamliners, Civil Aviation Administration of China mouthpiece CAAC News reports. The firm will soon open another route to Boston next year.

Sichuan Airlines and Xiamen Airlines have also indicated interest in US flights.

Analysts say the rapid expansion of China’s high-speed-rail network has been nibbling away at airline revenues and international long-haul fights may increasingly emerge as the pillar of profitability. An HNA senior sales executive believes that Chinese carriers will surpass their US counterparts in the number of passengers carried on the China-US routes in two years.

– Contact the writer at [email protected] 


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