All foreign pilots working for China Southern Airlines, Hainan Airlines, and a host of smaller mainland Chinese carriers have been placed on indefinite unpaid leave, according to multiple sources and a memo seen by the Post.
With the coronavirus crisis forcing airlines to slash flights, several hundred foreign pilots have seemingly become surplus overnight, with some telling the Post they were considering their options amid the uncertainty now facing the world’s fastest-growing air market.
“All foreign pilots, including those who have applied for leave exemption and those who have not, shall start a non-fixed term leave without pay as soon as possible,” a Tuesday memo to a batch of foreign pilots for China Southern, the country’s largest carrier, said.
Their grounding was effective that day, with the pilots told they would “return to work when [the] situation gets better.”
Xiamen Airlines along with Hainan Airlines, Tianjin Airlines and Beijing Capital Airlines (BCA) – a trio of carriers owned by debt-laden HNA Group – have also placed foreign aircrew on unpaid leave, according to multiple sources.
A source at BCA said their pilots had been offered the option of taking a significant pay cut that would bring them in line with their Chinese counterparts.
China Eastern Airlines, meanwhile, was understood to have offered unpaid leave to its foreign pilots but had not made it mandatory at this point.
The Post has contacted the airlines for comment.
The decision to ground foreign pilots, the most expensive employees outside executive rank, is a decision that will bring immediate cost savings but also affect hundreds of people.
Foreign pilots working in mainland China are generously paid. In recent years, lured by the promise of lucrative salaries and attractive flying schedules, foreign pilots jumped to mainland carriers as the China air travel market rapidly expanded.
One of the furloughed pilots, who asked to remain anonymous for fear of losing his job, said: “It is nice to be home, but like everyone, I have bills to pay, so being home for an indefinite period with no pay is obviously unsustainable.”
For now, China remains on course to overtake the US as the largest air travel market in the world by the middle of the decade, with 720 million people expected to take flight this year and double that number by 2035, according to China’s aviation regulator.
China Southern, the country’s largest airline by revenue and passengers carried, employed just shy of 10,000 pilots in 2018 and operates more than 820 aircraft. They carried 151.6 million passengers last year.
But the profit margins of the mainland Chinese carriers have eroded just a bit more with each passing day since the beginning of the coronavirus crisis.
Aviation data analytics firm Cirium said that between January 23 and February 3, the number of scheduled domestic Chinese flights that never left the airport – which included cancellations – stood at 30 per cent of 144,200 flights. On February 3, almost 60 per cent of domestic flights never took off, indicating a sharp drop in demand for domestic travel, which has had the largest impact on the decision to ground foreign pilots.
For the January 23-February 3 period, China Southern eliminated more than 7,900 flights, Xiamen Air scrapped 3,287, while Hainan Airlines coped with 2,967 fewer services within the mainland.
China Eastern, meanwhile, saw 27 per cent of its 23,093 domestic flights parked, while Air China flights were reduced by a fifth.
Luya You, Bocom International transport analyst, said the unpaid leave for foreign pilots was “definitely an indicator of the severe lack of demand [in air travel] for mainland carriers right now.
“Domestic demand has already been hit significantly in January, but I think outbound demand in particular will begin to show major decline as the outbreak spreads globally,” she said.
“As we see more long-haul routes temporarily suspended either in response to travel restrictions or lack of demand, we could also expect staff cuts on top of unpaid leave.”
A business that makes nothing but money is a poor business.