New Report: China’s Air Transportation Not Likely To Recover Soon

Despite reports of restoration of capacity toward pre-COVID levels, China’s air transportation system is not likely to recover prior traffic levels for at least another two years, according to a new report from Boyd Group International. This will have repercussions across the global aviation industry.

The findings are part of a research study, Clipped Dragons: China’s Airline System, completed by Boyd Group International. Business travel will be materially reduced, and leisure visitation to and from China is now fundamentally decimated, according to the report. A slowing economy and major changes within China in regard to treatment of foreigners have combined to smother what had been robust, expanding traffic.

Adding to this, the involvement of the Chinese government in the COVID-19 pandemic, and other international policies on its part have effectively changed the perception of the nation within the global air transportation system.

“There is a difference between restoration of capacity and a rebound in traffic,” notes Michael Boyd, president of Boyd Group International. “Remember, the China air transportation system is not completely driven by organic economic demand, but by government direction.” China’s system is primarily point-to-point and operates at the direction of several government and provincial entities, not the marketplace.

An Already Declining Growth Market, Pre-COVID. The report points out that domestic air passenger growth in China in 2019 had already dropped by nearly half from past rates, even before the corona virus epidemic. Furthermore, load factors at secondary airports were relatively low compared to the 25 largest airports, mainly due to fleets that are incompatible with the fundamentals of the marketplace.

Year 2020 – China’s Airports To See 30% Fewer Passengers. Forecasts accomplished by Boyd Group International previously indicated that China’s airports would handle a total of 1.46 billion passenger movements in 2020. Based on post-COVID estimates, the projection is now 945 million – putting China back to traffic levels of five years ago. There will be no rapid rebound – this figure is the new core demand.

China – U.S. Traffic To Decline By Over 80%. The days of large groups of Chinese traveling across America to visit places like the Grand Canyon, the Thousand Islands, New York City, and other venues are over, based on analyses in the report.

Reversing a 10-year trend, the forecast projects that annual air traffic between the United States and China will plunge from approximately 9.8 million passengers in 2019 to approximately 1.9 million in each of the next three years. “The main part of this traffic was leisure visitation, which, due to political and economic factors in China, is now essentially dead.” Diplomatic shifts, a declining Chinese economy, and additional and severe restrictions on movements of foreign visitors within China, all are components of this new market reality.

Clipped Dragons: China’s Airline System covers the key dynamics that will affect the future of the country’s air transportation system. These include reviews of the unique linear structure of the system, the inflexible system fleet mixes, the fallout from reduced international service, and the global effects on airliner demand with the emergence of a fleet glut in China.