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Global airlines adopt ‘wait and see’ approach as China slowly reopens

January 3, 2023

LONDON: The world’s airlines are taking a cautious approach to China’s reopening, reluctant to immediately change up schedules and divert planes from other routes despite the internal pent-up demand for international travel. Scheduled flights into China during January, February and March are up no more than 2.9 per cent this week compared to last week, according to aviation data provider Cirium. That’s fewer than 100 more flights each month. Planned inbound services for the remainder of the year are little changed – a sign China’s relaxation of quarantine restrictions from January 8 are yet to convince airlines to make significant changes to their timetables, according to Bloomberg.

Carriers’ lukewarm reaction to China’s border reopening amid a COVID surge doesn’t chime with the intense desire for overseas travel from people living in Asia’s biggest economy. Curbs on travelers from China are also limiting any immediate ramp-up in flights as major markets, including the US, mandate negative Covid-19 tests from arriving passengers.

“I don’t think airlines will shift capacity from what they’re doing now in China,” Subhash Menon, director general of the Association for Asia Pacific Airlines, said. Most will rather wait to assess the situation, with Hong Kong, which also recently did away with many COVID restrictions, being a useful testbed, he said.

Before the pandemic, China had an enormous outbound travel market. Mainland residents reacted swiftly to Monday’s news with bookings for outbound flights surging by 254 per cent on Tuesday morning versus the same period the day prior, Group Ltd. data show. The top five destinations were Singapore, South Korea, Hong Kong, Japan and Thailand. Flight bookings to Singapore jumped 600 per cent, while bookings to the remaining four destinations soared around 400 per cent.

Airlines in those countries, however, weren’t rushing to add capacity. Singapore Airlines said it will “continue to monitor the demand for air travel and adjust capacity accordingly.” Cathay Pacific Airways welcomed the announcement and said it will “continue to communicate with relevant authorities and increase our passenger capacity to and from the Chinese mainland as much as possible.”

Korean Air Lines said it plans to increase flights to China after the two nations mutually agreed to boost connectivity. Korean Air currently operates nine flights a week to seven cities in mainland China and will boost that to 15 flights to nine cities starting from next month, with the two additional cities being Shenzhen and Xiamen on top of Shenyang, Shanghai, Guangzhou, Dalian, Qingdao, Tianjin and Nanjing.

“There aren’t that many inquiries from Chinese, or from Koreans, for travel packages yet,” said Yook Hyun-Woo, a director at Modetour Networks, a major travel agency in Seoul. “We’re still worried a resurgence of the virus during winter may cool demand.” Japan said this week it will require a negative Covid-19 test result for travelers coming from China after infections there exploded, and asked airlines not to increase the current number of flights. US health authorities followed on Wednesday, while Italy will test all arrivals from China after almost half the passengers on two flights to Milan tested positive for the virus.

A Japan Airlines spokesman said it was unfortunate that the country had strengthened its border measures for China, but noted the carrier would act in accordance with government guidance. ANA Holdings said it’s watching the situation closely. Travelers from China made up nearly one-third of the 32 million visitors that flocked to Japan in 2019, before the pandemic. Qantas Airways in Australia, another popular destination for Chinese tourists, said it would “keep customers updated about any plans we have to recommence flights into China.”

Other foreign carriers meanwhile remain limited by lingering pandemic curbs in terms of what capacity they can add back to China. US airlines were restricted on the number of flights they could operate to China under an agreement between Chinese authorities and US Department of Transportation that dates to 2020 when the pandemic upended aviation. That accord would have to be modified for them to expand their China capacity. United Airlines Holdings is “currently evaluating the market demand and operating environment to determine when it’s right for us to resume additional flight operations to mainland China,” spokesman Joshua Freed said in an emailed statement. United currently flies between San Francisco and Shanghai four times a week. Delta Air Lines said it had no changes to announce for its China service. The airline has been flying to Shanghai from Detroit and Seattle with a stop at Incheon International Airport in South Korea for crew changes. American Airlines Group didn’t immediately respond to a request for comment. American currently operates twice-weekly flights from Dallas Fort Worth International Airport to Shanghai with a stop in Seoul.

Deutsche Lufthansa said it looked forward to increasing capacity and remains “committed to this important market.” The German group currently operates 17 weekly flights from Europe to Chinese gateways including Beijing, Shanghai and Hong Kong. Starting from January 16, Austrian Airlines will add one more weekly flight from Vienna to Shanghai. Lufthansa says it looks forward to increasing capacity to China and remains committed to the market. International airlines will also be seeking clarification around aircrew and whether they are able to stay overnight in China now quarantine has been dropped. Currently, many international carriers have to fly into China, drop off passengers and then fly to Seoul for the crew to spend the night there before flying back to China the next day to pick up fresh travelers for an onward overseas flight.

The industry’s main trade body, the International Air Transport Association, also said the requirement for pre-departure COVID tests needs to be removed. While online searches for Lunar New Year outbound flights were up 300 per cent as of December 27, searches for Labor Day flight tickets around the holidays in early May were up 600 per cent, VariFlight data show.

International ticket prices also aren’t showing any meaningful fluctuations and are still elevated. Polls on Chinese social media indicated high fares could be another deterrent. “I got so excited at the news and then the flight prices calmed me down,” one person wrote on an account on Weibo, which is similar to Twitter. “Will wait and see instead.” VariFlight analyst Wang Yi said international flight volumes will rebound gradually and probably “hit a real turning point by summer 2023.”