中国国航正在缓慢的复苏国内市场

Air China has filed domestic schedules for the week-long May holidays that offer similar capacity to 2019 levels, a remarkable sign of planned domestic aviation recovery.

It is quite possible the plans will be revised down again, as the airline continually adjusts its capacity, but there are few if any other airlines that would even contemplate such a recovery. As almost every other country has grounded most of its fleet, China is sending a message to the world that it believes normality is returning.

This is the first in a new CAPA report series, 'Airline Future Plans' , is designed to show which airlines have started the slow post-COVID-19 recovery process, moving beyond the operation of skeletal networks. The series aims to provide rare insights into airline strategy on core fleet and network deployment as airline management grapples with fast-changing circumstances.

China is emerging first, having largely contained its COVID-19 outbreak. The patterns established in China may offer some guidance to the rest of the world, just as China's strict containment measures have also provided cues to efforts elsewhere.

This report looks in particular at Beijing-based Air China's forward capacity/schedule plans and fleet utilisation trends.

China Southern Airlines, China Eastern Airlines and Hainan Airlines will also be covered in the first wave. Airlines in other countries will follow once they show evidence of success in containing COVID-19 outbreaks, such as in South Korea. The focus will be on countries whose airlines have access to domestic markets, which are expected to unlock first.

Summary: Air China's cautious domestic recovery - accelerates

• Domestic: Air China's domestic capacity levels have dropped approximately 40% on levels in 2019 - a welcome improvement from the 70% reduction in the trough in Feb-2020. Relative to other markets in the midst of massive COVID-19 capacity reductions of 90% cuts or worse, Air China's domestic operating output is very healthy.

• International: Air China, like its foreign counterparts, is now operating a skeletal international network. Seat capacity appears to have bottomed to a new low some 95% below the 2019 level, with no near term improvement expected as countries around the world enter lockdown and Air China operates just one frequency per week to selected destinations.

Air China's domestic operations: capacity addition become more aggressive as the May Labour Day (week-long) holiday approaches

Air China is consistently delaying the redeployment of 'normal' levels of service, but the airline is seemingly becoming more optimistic about the market situation from May-2020 - at least, according to its filed schedules. The CAAC has postponed the switch to summer schedules from late Mar-2020 to early May-2020, which is making direct year-on-year comparison difficult.

Air China's domestic capacity levels are currently down approximately 40% on levels in 2019 - a welcome improvement from the 70% reduction in the trough in February.

Relative to other markets in the midst of massive COVID-19 capacity reductions of 90% cuts or worse, Air China's domestic operating output is reasonably healthy.

Air China weekly total domestic seat capacity (millions): 2019 vs. 2020 (scenarios, see details)

Source: CAPA - Centre for Aviation and OAG

* These values are at least partly predictive up to 6 months from 16-Mar-2020 and may be subject to change.

Caution should be taken when looking further ahead than 2-3 weeks as schedules are adjusted on a week by week basis. A certain percentage of this capacity will be used for cargo, although the exact amount is unknown.

This graph plots the forward capacity based on consecutive weekly changes in forward filings of domestic schedules with OAG. This provides an insight into airline planning, with weekly oscillations reflecting the highly volatile environment that airlines are working in.

The green line shows Air China's plans from two weeks previously, the purple line was the previous week's expectation and the yellow line is the plan filed for w/c 30-Mar-2020.

Air China's domestic capacity bottomed in mid-Feb-2020; then planned increases were consistently later adjusted up and down - presumably to meet demand

• Domestic capacity bottomed out in the week commencing 17-Feb-2020, at 353,000 seats, a reduction of 76% year-on-year from the end of Jan-2020.

• However, in the week commencing 24-Feb-2020 there was then a rapid increase in seats to 659,000 seats, when the CAAC introduced a series of government support measures to encourage airlines to recommence air services. For more information, read: Coronavirus: China offers to pay airlines to return to the air.

• This bounce was followed by another increase of 33% in the week commencing 02-Mar-2020, to 874,000 seats, but in turn this was followed by a 4% decrease to 835,000 seats, possibly reflecting a stabilisation of underlying demand at these levels. Mar-2020 load factor and passenger performance will bear this out and are due for release in mid Apr-2020.

• Filings made on 16-Mar-2020 originally saw another increase to 905,000 seats, which was an increase of 8%, but revised filings on 23-Mar-2020 dropped that figure back to 864,000 seats. The 30-Mar-2020 filings reduced that still further, to 801,000 domestic seats.

• Schedules filed for the week commencing 23-Mar-2020 originally showed seat numbers starting to climb back up by the first week in April. However, filings made for the week commencing 30-Mar-2020 delayed that climb for another week, followed by a slightly more gentle increase up to 1.1 million seats, then 1.2 million, for the weeks of 06-Apr-2020 and 13-Apr-2020 respectively.

• The Labour Day Holiday at the start of May-2020 was anticipated to increase demand during the late Apr-2020 period in filings made on 16-Mar-2020 and 23-Mar-2020, but a subsequent filing on 30-Mar-2020 has reduced that demand to a more steady increase through Apr-2020.

• Air China's filing for the 27-Apr-2020 weekend was for 1.3 million seats, which is similar to 2019 levels.

Air China's international skeletal network: keeping connections open; large increase planned for the May holiday

Air China's international seat capacity appears to have found a new low in the week commencing 30-Mar-2020 - a drop of 95.0% year-on-year, reflecting the introduction of Air China's new skeleton international network (detailed below), under direction from the CAAC.

The airline's week-to-week expectations in the international market have been dealt blows by the rapid global spread of the virus and because of associated action by governments to close borders and restrict travel.

Air China is strategically seeking to maintain a variety of key routes, but with drastically lower frequency.

Air China weekly total international seat capacity, 2019 vs. 2020, and plans for significant increases: Mar-2020 to Sep-2020

Source: CAPA - Centre for Aviation and OAG

* These values are at least partly predictive up to 6 months from 16-Mar-2020 and may be subject to change.

Caution should be taken when looking further ahead than 2-3 weeks as schedules are adjusted on a week by week basis. A certain percentage of this capacity will be used for cargo, although the exact amount is unknown.

Air China international observations:

• International capacity dropped in mid-Feb-2020 with a decrease of 80% year-on-year to a low of just 80,000 seats from the end of Jan-2020, when 411,000 seats were available.

• Seat capacity remained around 80,000 for the rest of Feb-2020, at which time a small increase was predicted for the week commencing 16-Mar-2020, to 109,000 seats.

• Subsequent filings filed on 23-Mar-2020 reduced the numbers back to around 85,000 seats, and then were reassessed on 30-Mar-2020 to a new low of 22,000 seats, which was a reduction of 95% year-on-year. This extraordinarily low level of seat production will persist under the new skeletal schedule that is scheduled to operate until early May.

• The Labour Holiday at the start of May is prompting a large forecast increase from week commencing 27-Apr-2020, up from 22,000 to 88,000 seats, then a following rise for the week commencing 4-May-2020, to 279,000 seats - although that is still a reduction of 41% on 2019.

• Longer term planning is then showing schedules rising from the end of Jun-2020 back to 389,000 seats, which is very close to the 2019 levels of 396,000 for the same week.

Please see: Air China outlines international network until early May-2020 - limits on foreign airlines

In late Mar-2020 the CAAC issued a new policy to tighten international travel restrictions, due to increasing imported coronavirus cases as Chinese travellers returned home from abroad.

From 29-Mar-20 all Chinese airlines may maintain no more than one international route per country and operate no more than one frequency per route per week. Similarly, foreign airlines may operate no more than one route to China and one frequency per route per week. There is a target minimum load factor of 75%.

Following the announcement, on 28-Mar-2020 Air China announced that its international network from 29-Mar-2020 until 30-Apr-2020 would be as follows:

• Beijing Capital departures:

  • Los Angeles: weekly;

  • Vancouver: weekly;

  • Paris CDG: weekly;

  • Copenhagen: weekly;

  • Warsaw: weekly from 17-Apr-2020;

  • Minsk: weekly;

  • Stockholm: weekly;

  • Moscow: weekly;

  • Vienna: weekly from 14-Apr-2020;

  • Athens: weekly;

  • Delhi: weekly from 20-Apr-2020;

  • Phnom Penh: weekly;

  • Yangon: weekly;

  • Islamabad-Karachi: weekly from 17-Apr-2020;

  • Dubai: weekly from 16-Apr-2020;

  • Seoul Incheon: weekly;

• Shanghai Pudong departures:

  • Frankfurt: weekly;

  • London Heathrow: weekly;

  • Bangkok: weekly;

  • Tokyo Narita: weekly;

• Chengdu departures:

  • Kathmandu: weekly.

Gain further insights into Air China with CAPA's Fast Fact Reports. These customisable reports feature information and data on fleet, schedule analysis, cargo, traffic, financials and leadership team. Download here.

Air China's inactive fleet rises; widebody groundings to accelerate

According to the CAPA Fleet Database, Air China's inactive fleet peaked at 77.6% on 14-Feb-2020.

It has averaged 62% in the past week and the number of aircraft in service is steadily increasing.

The number of widebody aircraft joining the inactive fleet is expected to rise substantially in CAPA's subsequent weeks' reports, as the international skeletal schedule comes into effect.

Air China's inactive fleet (% of total): 28-Jan-20 to 28-Mar 2020

Source: CAPA Fleet Database https://centreforaviation.com/data/fleet

Air China's current fleet, as at 30-Mar-20

Source: CAPA Fleet Database https://centreforaviation.com/data/fleet

Air China's fleet orders and deliveries: 2020-2024

Source: CAPA Fleet Database https://centreforaviation.com/data/fleet.

Orders include those placed directly by the operator and by lessors assigned to the operator from 30-Mar-2020 onwards.

Air China average fleet age (years) by aircraft types in service

Source: CAPA Fleet Database https://centreforaviation.com/data/fleet.

Orders include those placed directly by the operator and by lessors assigned to the operator from 30-Mar-2020 onwards.

Appendix 1. Who is Air China?

As with the other Chinese major airlines, the Air China group includes a complex web of subsidiaries, affiliates and partial ownerships, as illustrated below.

Perhaps the most significant holding is its 29.99% share in Cathay Pacific Airways.

Detailed profiles for each of these airlines can be found on the CAPA site.

Source: CAPA - Centre for Aviation.

Appendix 2. China's COVID-19 curve flattening

The number of new cases in China has dramatically slowed since early March, reflecting aggressive containment measures in the outbreak epicentre - Wuhan/Hubei Province - and across the nation.

COVID-19 Global Vs. China Cases

Source: WHO, National Health Commission of the People's Republic of China & CAPA.

The rise in the numbers of COVID-19 cases in China broadly correlates with the decline in airline seat capacity globally.

Plotting the number of daily COVID-19 deaths and reversing the axis so that an increase is shown as a downward movement, and showing also the year-on-year decline in weekly airline seats, the following chart illustrates this relationship.

COVID-19 deaths in China (inverted axis) versus year-on-year decline in weekly China domestic airline seats

Source: CAPA, OAG, WHO, National Health Commission of the People's Republic of China.

REPORT SOURCES
Insights are drawn from the latest weekly flight schedules filed with OAG, with aircraft configuration data applied from the CAPA Fleet Database, to produce the Schedule Analysis tools.
https://centreforaviation.com/data/fleet