Chinese Airline Expansion Affects Foreign Airlines

China Southern Airlines
Boeing 737 MAX aircraft, including a 737 MAX 8 aircraft bearing the logo of China Southern Airlines (3rd L), are parked at a Boeing production facility in Renton, Washington, U.S. March 11, 2019. (Photo: REUTERS/David Ryder/File Photo)

Chinese airlines' aggressive expansion in the international market is experiencing rapid growth causing steady market share losses for foreign airlines in China as the profitability of their Chinese routes declines.

The international traffic of Chinese airlines increased by 14 percent in 2018 and the flow of its international passengers increased more than double over the past five years. Currently, there are 29 Chinese airlines competing in the international market. There were 12 Chinese airlines in the international market five years ago.

Five years ago, four Chinese airlines operate long haul passenger flights. This summer, 12 Chinese airlines are ready to serve international passengers on long haul flights. The competition among the local airlines and their international counterparts are intense. Over the past year, Chinese airlines have launched no less than 30 new long haul routes.

The competition in short/medium haul routes within Asia is also intense because of the rapid expansion from the Chinese airlines. The pressure on airline companies increases as they reach rapid demand growth. The outlook for yields and profitability in the Chinese international market is still uncertain because of the incoming surge of new routes for 2019.

Data from airline companies showed that the number of Chinese airline companies that operate international flights increased from 15 to 29 over the past three years. There were four to 10 Chinese airlines that operate long haul services over the past four years which will reach 12 this summer following the launch of Juneyao and Shanghai Airlines flights to Europe. The international seat capacity of Chinese Airlines also increased by 15 percent in 2018 and it increased to more than double over the past six years.

 Data showed that the number of foreign airlines in China is growing at a slow pace. In 2019, the international seat capacity of foreign airlines accounts to less than half of the international seat capacity to and from the country.

According to reports, 14 out of 29 Chinese airlines started launching international services over the past three years. Data also showed that Chinese airlines are growing faster than their foreign counterparts. Chinese airlines account for more than half of the total international seat capacity in China. In 2018 Chinese airlines surpassed the foreign airlines after they accounted for 51 percent of total international seat capacity which is an increase from the 49 percent share in 2017. The seating capacity of foreign airlines in China rose by 7percent in 2018.

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