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.