UK-China: British Airways and Virgin Atlantic withdrawals increase Chinese airline dominance

UK-China's capacity recovery from COVID-19 has outpaced the wider Europe-China market…

In the week of 12-Aug-2024, capacity between the UK and China is at 137% of seat numbers in the equivalent week of 2019.

This compares favourably with the overall Europe-China market, which is only at 89%.

…but UK airlines' seat share has fallen more dramatically over the past 10 years

However, UK airline seat share on UK-China has fallen more dramatically over the past decade.

10 years ago BA served three China destinations from Heathrow: Beijing, Shanghai and Chengdu. BA withdrew from Chengdu in Jan-2017 after just over three years, as it was not commercially viable.

UK airlines had 53.9% on UK-China in the week of 11-Aug-2014, but have only 12.6% now (Aug-2024).

European airline seat share on Europe-China has fallen from 56.3% to 25.5% over the same time frame.

BA has 7.4% of UK-China seats; Virgin Atlantic has 5.2%

The UK-China market is dominated by Chinese airlines, which have a collective seat share of 87.4%.

The market is led by Air China, with 27.4% of seats.

China Eastern Airlines has 18.8% of seats, China Southern Airlines has 17.6%, and Hainan Airlines has 11.8%.

The only UK airlines in this market are BA, with 7.4% of seats, and Virgin Atlantic, with 5.2%.

BA will withdraw from Beijing, and Virgin Atlantic will withdraw from Shanghai (its only route to China), at the end of the northern summer 2024 season.

From the start of the northern winter season, UK share will consist only of BA's Heathrow to Shanghai route, accounting for just 6.0% of UK-China seats.

UK to China: weekly seat capacity by airline, Sep-2011 to Jan-2025

Source: CAPA - Centre for Aviation, OAG.

UK-China comprises 18 airport pairs - 16 operated only by Chinese airlines

As of the week commencing 12-Aug-2024, there are 18 airport pairs (and 15 city pairs) between the UK and China.

UK airlines currently operate on only two airport pairs: London Heathrow to Beijing Daxing (BA) and London Heathrow to Shanghai Pudong (BA and Virgin Atlantic). Both are also operated by Chinese airlines.

The remaining 16 airport pairs are operated by Chinese airlines only, 15 of them with a sole operator, while one (London Gatwick to Shanghai Pudong) has two Chinese airlines.

UK to China: routes and operators, week of 12-Aug-2024

Rank	Origin	Destination	Seats	Airlines on route (in order of seat capacity)
1	London Gatwick	Shanghai Pudong	6,608	China Eastern Airlines, Air China
2	London Heathrow	Shanghai Pudong	5,572	China Eastern Airlines, Virgin Atlantic, BA
3	London Heathrow	Beijing Capital	4,361	Air China
4	London Heathrow	Beijing Daxing	3,349	China Southern Airlines, BA
5	London Gatwick	Beijing Capital	2,184	Air China
6	Manchester	Beijing Capital	2,086	Hainan Airlines
7	London Heathrow	Guangzhou Baiyun	2,023	China Southern Airlines
8	London Heathrow	Shenzhen Bao'an	1,545	Shenzhen Airlines
9	Edinburgh	Beijing Capital	1,192	Hainan Airlines
10	Manchester	Shanghai Pudong	972	Juneyao Air
11	London Heathrow	Chengdu Tianfu	909	Air China
12	London Heathrow	Changsha Huanghua	876	Hainan Airlines
13	London Gatwick	Guangzhou Baiyun	867	China Southern Airlines
14	London Heathrow	Qingdao Jiaodong	588	Beijing Capital Airlines
15	London Gatwick	Zhengzhou Xinzheng	532	China Southern Airlines
16	London Heathrow	Wuhan Tianhe	532	China Southern Airlines
17	London Heathrow	Xian Xianyang	520	Tianjin Airlines
18	London Heathrow	Chongqing Jiangbei	520	Tianjin Airlines

Source: CAPA - Centre for Aviation, OAG.

London-Beijing: BA's scheduled flight times are 14%-21% longer than Chinese competitors

London to Beijing is served by three airlines: BA, China Southern and Air China.

BA and China Southern fly between Heathrow and Beijing Daxing (PKX).

Air China operates to Beijing Capital (PEK) from both Heathrow and from Gatwick (summer only).

ASK capacity data based on OAG schedules and seat configuration data from CAPA - Centre for Aviation use Great Circle distances for the distances between each pair of airports.

This clearly does not reflect the reality that UK airlines are flying longer distances than their Chinese competitors on each route.

However, the flight times reported in schedules data do show significant differences in the duration of trips.

BA's outbound LHR-PKX scheduled flight time is 14% longer than China Southern's on the same airport pair. On the inbound leg, BA's flight time is 21% longer.

There are similar differences between BA's LHR-PKX flight time and Air China's flight times on LHR-PEK and LGW-PEK. (The Great Circle distances on the two Air China routes are both slightly shorter, but by less than 1%.)

London-Beijing: average scheduled flight times (hours), week of 12-Aug-2024

Source: CAPA - Centre for Aviation, OAG.

London-Shanghai: BA and Virgin Atlantic's scheduled flight times are 11%-20% longer than Chinese competitors' times

A similar picture emerges on BA's other China route, LHR to Shanghai Pudong (PVG).

This airport pair is also operated by China Eastern and Virgin Atlantic, while China Eastern also flies between London Gatwick and Shanghai, as does Air China.

BA's outbound leg is scheduled to take 11% longer than China Eastern's on the same airport pair, and its inbound flight is 17% longer.

Virgin Atlantic's LHR-PVG schedule gives the same flight times as BA's.

The two UK airlines' flight times are also 15% longer outbound, and more than 20% longer inbound, than the LGW-PVG flights operated by Air China and China Eastern.

London-Shanghai: average scheduled flight times (hours), week of 12-Aug-2024

Source: CAPA - Centre for Aviation, OAG.

Longer flight times mean greater fuel burn and higher costs…

Of course, the time between scheduled departure and scheduled arrival is not the true flight time, since schedules include a margin for delays.

Nevertheless, the differences between the timetables of the UK and Chinese airlines are indicative of the longer routes taken by the UK operators.

Flights that take in the region of 15% to 20% longer also burn more fuel by similar margins, compared with competitors.

…which cannot easily be offset with higher fares

In a competitive marketplace, it is extremely difficult for the two UK airlines serving China to increase their prices enough to offset the additional fuel costs.

This is particularly challenging when the service offered is compromised by a longer flight duration.

BA is small on London-Beijing, which will have no UK operator after BA's withdrawal

Judged by capacity share, BA is only a minor player on the London-Beijing city pair, with just 11.0% of seats and eight weekly frequencies on the city pair.

This compares with 66% of seats and 42 weekly frequencies for Air China and 23% of seats and 14 frequencies for China Southern.

BA's withdrawal from LHR-PKX will leave China Southern as the sole operator on the airport pair.

There will be no UK operator on the London-Beijing city pair, which will be a duopoly between Air China and China Southern.

London-Shanghai will be even more dominated by Chinese airlines after Virgin Atlantic's withdrawal

The two UK airlines currently operating London-Shanghai also have a small seat share on this route, albeit more than on London-Beijing.

Virgin Atlantic is currently slightly bigger than BA on London-Shanghai, with 15% of seats and 14 weekly frequencies to BA's 12% of seats and 14 frequencies.

China Eastern is comfortably the biggest operator on the city pair, with 55% of seats and 49 frequencies.

Air China has 18% of seats and 14 frequencies.

Virgin Atlantic's withdrawal from LHR-PVG will leave the airport pair as a duopoly between BA and China Eastern.

The London-Shanghai city pair will have three operators: China Eastern, Air China, and BA.

BA and Virgin's codeshares with Chinese partners may be only of limited use

BA's codeshare with China Southern will continue to give it access to domestic Chinese destinations via Shanghai, However, the partnership currently includes a larger number of codeshare routes via Beijing Daxing, which BA will no longer serve.

BA will continue its twice-daily Hong Kong service, but its codeshare with Cathay Pacific on routes from Hong Kong does not include domestic Chinese destinations.

Virgin Atlantic currently has a codeshare with China Eastern on domestic routes from Shanghai - but this will be of limited value when the UK operator removes this sole point of arrival in China.

Longer flights have made China routes unsustainable for BA and Virgin Atlantic

The closure of Russian airspace to Western operators is the chief cause of BA's withdrawal from Beijing and Virgin Atlantic's withdrawal from Shanghai.

The consequent increase in the cost of flights between the UK and China has not hit Chinese operators, who are still flying through Russian airspace.

This has led to an unsustainable competitive disadvantage for the two UK airlines on routes that are dominated by Chinese competitors.

However, taking a longer view, this is just the latest setback in a persistent decline in UK airlines' share of the UK-China market.