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Wednesday, Sep 23, 2020

Coronavirus: China’s airlines offer domestic flights for as little as US$4 as industry struggles amid outbreak

Coronavirus: China’s airlines offer domestic flights for as little as US$4 as industry struggles amid outbreak

Around two thirds of the total number of flights scheduled every day in February were cancelled, placing huge financial pressure on airlines and airports. China’s aviation industry has also been affected by a series of restrictions by other countries and airlines, with British Airways extending its suspension until mid-April
A one-way air ticket from the coastal economic hub of Shanghai to the inland municipality of Chongqing, a journey of over 1,400km (870 miles), now costs less than a cup of coffee, with Chinese airlines slashing prices in a bid to boost weak domestic demand amid the coronavirus outbreak.

The cancellation of around 10,000 flights a day, or around two thirds of the total number of flights scheduled every day in February, has placed huge financial pressure on airlines and airports.

The Civil Aviation Administration of China said in a notice on Tuesday that flights should resume gradually as part of the country’s efforts to return economic and social life back to normal, but passengers are still reluctant to fly with the deadly outbreak still not fully under control.

The one-way flight from Shanghai to Chongqing is being offered for just 29 yuan (US$4.10) by China’s biggest low-cost carrier, Spring Airlines, as a special offer for its frequent flyer club members, while a tall caffe latte at Starbucks in China costs 32 yuan (US$4.5).

A one-way ticket from Shanghai to Harbin, the capital of the northern Heilongjiang province, a distance of over 1,600km (994 miles), costs just 69 yuan (US$9.80).

Shenzhen Airlines, a division of state-owned carrier Air China, is also running special offers to Chongqing, with a one-way ticket for the 1000km (621 miles) journey from Shenzhen costing just 100 yuan (US$14), around 5 per cent of the standard price of 1,940 yuan (US$276).

Chengdu Airlines, a unit of Sichuan Airlines, which counts China Southern Airlines as a shareholder, is also offering cheap one-way flights from Shenzhen to Chengdu, a distance of over 1,300km (808 miles), for just 100 yuan.

“Considering lower average costs of operating in mainland China, carriers could potentially offer deeper discounts while making slim profits or just breaking even,” said Luya You, an aviation analyst with Bank of Communication International. “As outbreak numbers stabilise or even decline, carriers will likely adjust their fares as well, so these low fares will not last if the situation quickly turns for the better.

“Many Chinese carriers do receive subsidies for operating key domestic routes, so this also skews the economics as well. If it is a key route, for example, the carrier may choose to continue operating regardless of fares or loads as the route constitutes a major link in the domestic network infrastructure.”

China’s aviation authority confirmed earlier this month that between January 25 and February 14, which included the Lunar New Year holiday, the average daily passenger traffic in China was just 470,000, representing a 75 per cent drop from the same period last year.

China’s aviation industry has also been affected by a series of restrictions by other countries and airlines, with British Airways last week extending its suspension of flights to China until after the Easter holiday in mid-April following travel advice from the British government.

The novel coronavirus, which causes the disease officially named Covid-19, has infected more than 78,000 people and killed 2,700 in China. In recent days, South Korea, Italy and Iran have all reported a surge in new cases, raising fears over the spread of the coronavirus.

“The flight suspensions will track the outbreaks, but not likely lead them. If there are more outbreaks, expect more flight suspensions,” said Andrew Charlton, managing director of Aviation Advocacy.
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