Chinese airlines: rapid international growth impacts foreign airlines
The Chinese international market is experiencing rapid growth, driven by aggressive expansion from Chinese airlines. Foreign airlines have been steadily losing market share in China and the profitability of their Chinese routes has been on the decline.
Chinese airlines grew international passenger traffic by 14% in 2018 and have more than doubled international passenger traffic over the past five years. There are now 29 Chinese airlines competing in the international market, compared with 12 airlines five years ago.
This summer there will be 12 Chinese airlines operating long haul passenger flights, compared to only four airlines five years ago. Chinese airlines have launched more than 30 new long haul routes over the past year, resulting in intense competition for both local and sixth freedom traffic.
Competition has also intensified on short/medium haul routes within Asia due to rapid expansion from Chinese airlines, pressuring yields as capacity increases have outstripped rapid demand growth. Another surge of new routes (within Asia and long haul) are planned for 2019, resulting in a gloomy outlook for yields and profitability in the Chinese international market.
- The number of Chinese airlines operating international services has grown from 15 to 29 over the past three years.
- The number of Chinese airlines operating long haul services has grown from four to 10 over the past four years and will reach 12 this summer when Juneyao and Shanghai Airlines launch services to Europe.
- Chinese airlines grew international seat capacity by 15% in 2018 and have more than doubled international seat capacity over the past six years.
- Foreign airlines have grown in China at a much slower pace and for the first time in 2018 they accounted for less than half of international seat capacity to/from China.
- Chinese airlines are pursuing more rapid international expansion in 2019, which will impact foreign competitors as yields and profits are further pressured.
29 Chinese airlines now operate international services
There are now 29 Chinese airlines operating international services (based on OAG schedule data for the week commencing 25-Feb-2019). At the moment there are only 11 airlines in China that operate entirely in the much larger domestic market.
Collectively, Chinese airlines have seven times more seat capacity in the domestic market (14 million weekly domestic seats compared to 2 million international seats).
The three largest airlines in China (Air China, China Eastern and China Southern) account for 61% of international seat capacity from Chinese airlines, or 33% of total international seat capacity (when foreign airlines are also included). Each of these airlines has well over 100 international routes and is relatively similar in size.
Another three airlines (Spring Airlines, Xiamen Airlines and Hainan Airlines) have at least 100,000 weekly international seats and account for another 12% of the international capacity generated by Chinese airlines.
The remaining 18 competitors all have small international operations, less than 20,000 weekly seats, and combined account for 12% of the market. None of these smaller competitors has more than a 1% share and 14 of them have six or fewer international routes.
Chinese airlines ranked by international seat capacity and number of international routes: w/c 25-Feb-2019
|Rank||Airline||Weekly seats||Seat share*||Number of routes|
|1||China Eastern Airlines||MU||460,191||22.8%||175|
|2||China Southern Airlines||CZ||393,140||19.5%||163|
|15||Beijing Capital Airlines||JD||15,384||0.8%||15|
|21||Guangxi Beibu Gulf Airlines||GX||5,040||0.2%||2|
|26||China United Airlines||KN||2,478||0.1%||2|
|28||China Express Airlines||G5||1,044||0.1%||2|
Number of international Chinese airlines doubles in three years
A staggering 14 of the 29 airlines have launched international services over the past three years.
China Express Airlines, Loong Airlines, Tibet Airlines, West Air and 9 Air began international services in 2016 (based on OAG data).
Two more Chinese airlines, Guangxi Beibu Gulf Airlines and Qingdao Airlines, began international services in 2018. (9 Air also resumed international services in 2018; it initially launched international services in 2016 but did not operate any international flights in 2017.)
Long-standing competitors also expand rapidly
All 12 of the Chinese airlines that were already operating international services five years ago have also pursued rapid expansion. All 12 grew international seat capacity in 2018, with growth rates ranging from 5% to 26%.
All 12 have also grown international seat capacity by at least 60% over the past six years.
The three Chinese majors have grown at the slowest rate on a percentage basis but have each added 8 to 10 million annual seats. The nine medium sized airlines have grown at a faster rate but on a small base, adding at most 5 million annual seats.
Chinese airlines: annual international seat capacity, 2018 vs 2012
|Rank||Airline||2018||2017||2015||2012||1 year growth||3 year growth||6 year growth|
|1||China Eastern Airlines||MU||22.960||21.184||18.252||13.356||+8%||+26%||+72%|
|2||China Southern Airlines||CZ||19.721||17.325||15.527||10.577||+14%||+27%||+86%|
|14||Beijing Capital Airlines||JD||0.786||0.638||0.439||0||+23%||+79%||N/A|
|24||China United Airlines||KN||0.071||0.001||0||0||+7319%||N/A||N/A|
|25||China Express Airlines||G5||0.061||0.026||0||0||+137%||N/A||N/A|
|26||Guangxi Beibu Gulf Airlines||GX||0.035||0||0||0||N/A||N/A||N/A|
|TOTAL (Chinese only)||97.675||84.963||70.435||43.938||+15%||+39%||+122%|
|TOTAL (includes foreign)||191.752||173.296||146.926||104.450||+11%||+46%||+84%|
Chinese airlines grow faster than foreign airlines
Foreign airline seat capacity in China increased by 7% in 2018, whereas Chinese airlines grew international seat capacity by 15%. Over the past six years foreign airline seat capacity has increased by 55%, while Chinese airlines have increased seat capacity by 122% (more than twice as fast).
Chinese airline international passenger traffic increased by 14% in 2018
Chinese airlines: annual international passenger traffic (excludes Hong Kong, Macau and Taiwan), 2008 to 2018
Foreign airlines impacted by rapid expansion from Chinese competitors
Top 10 foreign airlines in China ranked by weekly seat capacity: w/c 25-Feb-2019
|Rank||Airline||Weekly seats||Capacity share|
|4||Hong Kong Airlines||HX||67,908||1.8%|
|6||All Nippon Airways||NH||63,265||1.7%|
|7||Thai Lion Air||SL||62,466||1.6%|
Impact on foreign airlines intensifies as Chinese airlines expand long haul
Chinese airlines have launched many more long haul routes over the past year
Chinese airlines: number of international routes by region (with number of routes launched over the past year in parenthesis)
|1||China Eastern Airlines||MU||141 (12)||10 (0)||12 (0)||10 (0)||2 (1)||175 (13)|
|2||China Southern Airlines||CZ||124 (18)||10 (0)||16 (5)||7 (1)||6 (1)||163 (25)|
|3||Air China||CA||79 (8)||7 (0)||28 (3)||10 (0)||3 (1)||127 (12)|
|4||Hainan Airlines||HU||32 (5)||8 (1)||21 (10)||17 (3)||3 (1)||81 (20)|
|5||Xiamen Airlines||MF||47 (6)||4 (0)||2 (1)||5 (0)||0||58 (7)|
|6||Spring Airlines||9C||57 (11)||0||0||0||0||57 (11)|
|7||Sichuan Airlines||3U||36 (12)||5 (0)||4 (1)||4 (0)||4 (2)||53 (15)|
|8||Shenzhen Airlines||ZH||29 (6)||0||1 (1)||0||0||30 (7)|
|9||Shanghai Airlines||FM||21 (1)||0||0||0||0||21 (1)|
|10||Juneyao Air||HO||19 (2)||0||0||0||0||19 (2)|
|11||Shandong Airlines||SC||18 (2)||0||0||0||0||18 (2)|
|Lucky Air||8L||17 (3)||0||1 (0)||0||0||18 (3)|
|13||Okay Airways||BK||15 (7)||0||0||0||0||15 (7)|
|Beijing Capital Airlines||JD||7 (1)||3 (0)||4 (1)||1 (0)||0||15 (2)|
|15||Tianjin Airlines||GS||6 (1)||3 (0)||2 (2)||0||0||11 (3)|
|16||Donghai Airlines||DZ||5 (5)||1 (1)||0||0||0||6 (6)|
|17||Ruili Airlines||DR||5 (4)||0||0||0||0||5 (4)|
|Loong Airlines||GJ||5 (4)||0||0||0||0||5 (4)|
|19||Hebei Airlines||NS||4 (1)||0||0||0||0||4 (1)|
|Kunming Airlines||KY||4 (2)||0||0||0||0||4 (2)|
|21||Chongqing Airlines||OQ||3 (2)||0||0||0||0||3 (2)|
|9 Air||AQ||3 (3)||0||0||0||0||3 (3)|
|Qingdao Airlines||QW||3 (3)||0||0||0||0||3 (3)|
|Tibet Airlines||TV||3 (3)||0||0||0||0||3 (3)|
|25||China United Airlines||KN||2 (1)||0||0||0||0||2 (1)|
|Guangxi Beibu Gulf Airlines||GX||2 (2)||0||0||0||0||2 (2)|
|China Express Airlines||G5||2 (0)||0||0||0||0||2 (0)|
|28||Chengdu Airlines||EU||1 (1)||0||0||0||0||1 (1)|
|West Air||PN||1 (0)||0||0||0||0||1 (0)|
Long haul expansion impacts Chinese airline profitability
Chinese widebody fleet expands
Chinese airlines ranked by widebody passenger fleet size: as of 5-Mar-2019
|Rank||Airline||Aircraft in service||Aircraft on order|
|2||China Southern Airlines||CZ||82||40|
|3||China Eastern Airlines||MU||76||27|
|7||Beijing Capital Airlines||JD||11||0|
More rapid growth expected in 2019 as new route applications pour in
In the first two months of 2019 Chinese airlines secured CAAC approval for over 50 new international routes and submitted applications for more than 120 new international routes. Not all these routes will be launched (typically Chinese airlines do not launch a large proportion of their approved new routes).
The impact on foreign airlines is a concern. Airlines from all the major regions will be impacted, including from Australasia, Europe, Africa, the Middle East and the Americas. However, the biggest impact will be on other Asian airlines, particularly airlines from Southeast Asia and other parts of North Asia (Hong Kong, Japan, South Korea and Taiwan).