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Chinese Aviation Authority Supporting Airline-Saving Measures
Earlier this month, the Civil Aviation Administration of China said it would promote and allow measures that allow airlines to continue to stay afloat as the country’s aviation industry is plagued by the lack of travel resulting from the novel coronavirus that has filled up headlines.
The Chinese aviation regulator would support “restructuring and mergers” in the months ahead as airlines continue to struggle from cash flow issues, Reuters reported on Feb. 11.
According to the same report, airlines in China canceled 12,662 flights on Feb. 11, a number that is not likely to change much as the virus — which began in Wuhan in China’s Hubei province — continues to rear its head around the world. The World Health Organization’s newest situation report put the number of new cases just under 2,000 and the number of new deaths at 98, meaning it is unlikely the world will see a refuge anytime soon.
Airlines around the world have canceled flights to China for months to come to such a degree that OAG Aviation Worldwide suggested that airlines only operated around 20 percent of usual capacity to the beleaguered country between Jan. 20 and Feb. 17. That represents a loss of 1.7 million seats, a number that pales in comparison to the 10.4 million domestic seats that airlines dropped in the same period.
“No event that we remember has had such a [devastating] effect on capacity as Coronavirus,” John Grant wrote in the OAG report. “In many ways it highlights the importance of the Chinese market to aviation and the rapid globalisation of air services as new markets and travellers emerge everyday.”
Further still, he addressed the potential for the events of this year to have lasting effects.
“Ultimately,” he continued, “the market will recover. [We] know that, but in the short term the damage to some airlines and the long term impact on their growth may linger beyond the virus.”
Between the quarantines and travel restrictions, operating an airline in China successfully has become all but impossible. Demand has plummeted as many in the country are not even allowed to travel and far fewer even have a desire to.
This drastic fall in demand has only made the glut in supply more clear as dozens of airlines across the country fail to fill even a small fraction of their seats.
The anticipated growth of the Chinese aviation industry, which the International Air Transport Authority expects to surpass the U.S. as the biggest domestic market by 2030, has led billionaires, multinational corporations and huge conglomerates to throw their hats into the ring in an attempt to garner a piece of the revenues and profits for themselves. But that rush has led to price wars in which some carriers have been woefully unable to compete.
Even some well-established carriers like Hainan Airlines, a wholly-owned subsidiary of the Chinese conglomerate HNA Group, have been struggling in recent years. And even after years of operating successfully both within and outside of China, the carrier has been crumbling under its own ambition. Just Wednesday, news surfaced the government was looking to buy out the group and sell off its airline assets, Bloomberg Law reported.
Even still, while the CAAC is leaving the door open for airlines to make moves that will keep them afloat in the midst of these difficult times, it remains to be seen whether that will prove enough to save the countless carriers in the weeks, months and even years ahead.
The extent of the toll the virus will take will likely not be known until well after it has passed. So for now, the best airlines can do is work to weather the storm, even if it means less competition and more cooperation across the country.
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