China’s international travel is still down overall, with wide variance between markets


The pace of China's international capacity recovery has remained slow this year, particularly in the US-China market, where tight limits on flights are constraining growth.

China took a relatively conservative approach to opening its borders after the COVID-19 pandemic, which meant that its international capacity rebound trailed most other countries in the Asia-Pacific region.

Although China largely removed its travel restrictions in 2023, economic conditions are now playing a major role in dampening demand for Chinese outbound travel.

Meanwhile, Chinese domestic demand is booming, and there has likely been a slight shift in leisure travel from international to domestic since the COVID pandemic.

Recovery rates on China's international routes vary. Its three largest international markets, which are also in Asia, have returned to 70-80% of pre-pandemic levels.

The US was China's most significant long haul market in 2019, but it has slipped down the list thanks to a capacity recovery in this market of just 25%.

In this case, US government policies are limiting the number of flights Chinese airlines can operate between the two countries.

  • China’s international capacity is at 71.1% of its 2019 levels – up by 3.4 points since the start of 2024.
  • The US has slipped six places to 13th on China’s list of top international markets.
  • United Airlines has largest share of US-China market, closely followed by Air China.
  • The US is restricting Chinese airlines to 50 flights per week, after Mar-2024 increase.

China's post-pandemic international capacity has not accelerated as quickly as expected

Data from CAPA - Centre for Aviation and OAG shows that mainland China's international capacity reached 71.1% of its 2019 levels for the week of 13-May-2024.

This is only a slight increase from the start of 2024. For the week of 8-Jan-2024, international capacity was at 67.7% of 2019 levels - so there has been an improvement of just 3.4 percentage points since then.

The chart shows a bump in early Feb-2024, representing the Spring Festival holiday period.

Aside from that, the rate of increase appears fairly flat.

Mainland China: international capacity, as measured in weekly seats, 2019-2024

US-China traffic is particularly low, but not because of demand

The charts below show the countries and territories with the most weekly seats to mainland China.

The first is for the week of 13-May-2019, and the second shows the same list five years later, for the week of 13-May-2024.

The most notable difference is the ranking of the US In 2019 - it was China's sixth largest source of international capacity, but in the 2024 list it has slipped to 13th place.

Mainland China: top 15 international markets (countries and territories), as measured by arriving seats for the week of 13-May-2019

Mainland China: top 15 international markets (countries and territories), as measured by arriving seats for the week of 13-May-2024

While all of the top 15 markets are down from pre-pandemic levels, the largest shortfall is in the US market.

Weekly seats were still down by 75% from 2019 levels in the week of 13-May-2024.

There was an overall decline of 1.1 million weekly seats in the Chinese international market versus 2019 levels, and the drop in the US-China market accounted for 7% of the overall decline.

The following chart shows seat capacity trends in the China-US market since 2019. Capacity began rising from early 2023 as China started removing its travel restrictions.

Improvement has been slow.

However, there was an uptick in late 2023, and another around Apr-2024.

Mainland China-US capacity, as measured in weekly seats, 2019-2024

There are nine airlines operating between the two countries, according to data from CAPA - Centre for Aviation and OAG. Three of these are US-based, and the others are from mainland China.

United Airlines has the largest share of seats in this market, with 19.1%. Air China is close behind with 18.2%.

Airlines operating between Mainland China and the US, share by weekly seats and year-on-year change

The main factor behind the low capacity recovery rate in the US-China market has been regulatory constraints, rather than demand.

The US government has been slow to increase the number of weekly flights Chinese airlines can operate in its market. Both countries imposed tighter limits during the COVID-19 pandemic.

In its latest step, on 31-Mar-2024 the US government raised the limit of weekly flights by Chinese airlines from 35 roundtrips per week to 50.

Although that is a significant rise, it is still far short of the 150 roundtrips allowed before the pandemic.

The US airline lobby group Airlines for America (A4A), supported by the major aviation unions, has called for the government to refrain from further increases to the China-US flight limits.

A4A claims Chinese airlines have an unfair competitive advantage due to their relationship with the Chinese government.

A collateral effect of the US-China restrictions has been a boost in connecting traffic for some airlines

The limitation of direct flights between the US and China has benefitted airlines from other countries that offer connecting services between these markets.

This has, no doubt, helped the Japanese airlines and Korean Air, which have reported strong gains in transit traffic between Asia and North America since the pandemic.

Other airlines with hubs well placed for US-mainland China traffic flows are Cathay Pacific, and the Taiwanese airlines.

An additional side effect of the limitation on US-China flights has been that airlines in both countries have spare long haul capacity to divert to other international markets.

For example, US airlines have boosted service to New Zealand beyond pre-pandemic levels. Air New Zealand has stated its belief that this is partly due to the constraints on US-China capacity.

Some of China's overseas markets have experienced a much stronger travel rebound

Although the US-China market remains depressed, many of China's other international markets are surging.

Examples of this are the China-Vietnam market, as detailed in this report. Chinese visitor numbers to Vietnam are now fully recovered to pre-pandemic levels.

This report outlines how capacity in the New Zealand-China market has almost recovered to 2019 levels, and is set to exceed that mark in the upcoming southern hemisphere winter season.

Capacity between Thailand and China is at about 70% of 2019 levels.

The China-South Korea market is at 75%, and China-Japan at 80%.

These were three of China's leading international markets before the pandemic.

Capacity between mainland China and Europe has recovered to 85%.

Singapore Airlines is seeing improvement on China routes, thanks to visa programme

Singapore Airlines has reported strong traffic on flights to China, although sales in China for outbound travel are still recovering.

The airline said it has seen "a significant uptick" in passenger load factors on its mainland China routes in recent months.

One factor contributing to the improvement is the introduction of a 30-day visa-free initiative in Feb-2024, covering Singaporean and Chinese passport holders.

The SIA Group, which includes Singapore Airlines and Scoot, is serving 23 destinations in mainland China, versus 25 before the pandemic. Singapore Airlines has flights to seven Chinese destinations, and Scoot has 17 (Guangzhou is served by both).

The airline has had challenges securing regulatory approvals on some routes, including those to Chengdu, Xiamen and Chongqing.

SIA now has approval for the Chengdu and Xiamen routes through to 1-Jul-2024.

The airline is operating to Chongqing and Shenzhen through 25-Oct-2024, during the northern hemisphere summer season.

SIA is working with Chinese authorities to extend authorisation beyond Jul-2024 on some routes, airline executives said during a recent results briefing. In general, SIA is progressively restoring more capacity to China, executives said.

There are many factors complicating the US-China market - any major improvement could affect other Asia-Pacific markets too

While most of China's international markets still have some way to go to achieve full recovery, the gap is most significant in the US market.

This may not be mainland China's largest international market, but it is still an important one.

Because of the artificial constraints in place on US-China routes, it is difficult to assess where demand and capacity would otherwise settle in this market. It would certainly be higher than the current levels, but would likely be short of 2019 levels.

If the US-China direct flights do increase again, they would probably take some of the transit traffic away from other Asian connecting hubs - and would also likely cause some US and Chinese airline capacity to switch back from other markets.

As a general rule, the removal of the last vestiges of pandemic-era restrictions on air services would be something the aviation industry should push for.

However, it is not that simple in this case. The US-China relationship is a complicated one, and a range of outside factors come into play. For that reason, the complete reopening of this market could take some time.

This article was written on 20-May-2024.

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