Introduction
In June 2020, CAAC drew an annual portrait of China’s aviation industry, through its annual Aviation Industry Report, covering commercial, cargo, and general aviation. In this blog post, we’ll focus essentially on commercial passenger transportation. While published in 2020, this report is based on figures of 2019, thus drawing a very different and positive picture of an industry that has recently suffered dearly during the past 6 months of Covid-19. The report remains nevertheless useful to appreciate the dynamics of the post-epidemic aviation market. Also, the flow of passengers in China are overwhelming from domestic routes, and China’s rather efficient management of the epidemic over the past months could mean a more rapid ramp-up of flight schedules compared to other regions of the world.
If we look at the number of flights per day in China comparatively to a country of similar size and market such as the USA (see Fig. 1), it is clear that the post-Covid19 shock recovery is much more advanced in China. At the time of writing, China has breached the mark of 13 000 flights daily, roughly 70-75% of its pre-Covid19 flight capacity. The USA, on the other hand, are still feeling the heat of the epidemic and are in stagnation with the number of daily flights roughly 50% of the usual capacity, according to the data by Variflight as of August 15th 2020.
And… back to Chinese Aviation in 2019
A Strong Growth in both Domestic and International Flights
Let’s wind back to the happier days of 2019. In 2019, China’s airline industry transported 659,9 million passengers, an annual increase of 7,9%. The contribution of domestic flights were of of 585,7 million (+6,9%), Hong-Kong-Macau-Taiwan of 11,7 million (-1,7%), and international flights of 74,3 million (+16,6%).
With these first figures, the domination of domestic flights is apparent (approximately 89% of all pax), and this domination is even higher in terms of number of flights, as international flights are generally flown with large twin-aisle aircraft. International flights grew at a very healthy 2-digit rate, partly reflecting the opening of new routes from domestic airports. Also of interest is the decrease for HK-MA-TW passengers, likely due to the unrest in Hong-Kong in the second half of 2019, during which tourism experienced a strong dip and business travel slowed.
Will this growth continue (Covid19 notwithstanding)?
All the fundamental parameters would suggest so. With an annual flow of 659,9 million passengers within a country of 1,4 billion, that’s approximately 0,47 flight/person/year in China. And probably slightly less if you factor in that a small part of these are foreign citizens on international routes. A country of comparable size and structure, the US, was at 926 million passengers transported in 2019 [1], with a population of 328 million, in other words 2,82 flights/person/year. Short answer: yes, the growth potential in China remains huge.
Of interest however is the slower growth rate (but still comparatively significant): China’s growth dropped from two-digit to single digit figures in 2019 (see Fig. 2).
A Review of Chinese Airlines in 2019
According to the CAAC, in 2019, China had 62 commercial airlines. That’s 2 more than in 2018. Among them, 48 were state-owned airlines, and 14 were private companies.so
These 62 airlines operated a total of 3645 aircraft, an +166 increase (+4,6%) compared to 2018. As one would expect with a domestic-flight dominated market, narrowbody aircraft represent 2997 aircraft, i.e. 78,5% of the entire Chinese fleet.
Which airlines are these, and how big are they? In 2019, I wrote a blog post about the airline landscape and the domination of the “Big Four”. This landscape has not changed a bit. In the past year, China Southern Group, Air China Group, China Eastern Group, and HNA dominated the airline industry, with respectively 25,2%, 24,6%, 19,5% and 15,6% of passengers transported. That’s a whooping 85% of all Chinese air traffic (Fig. 3).
Interestingly however, the “non-big four” airlines experienced significantly faster growth. Their increase in number of passengers transported was of 15,8%, compared to the 8,5%, 7,5%, 3,5% and 1,9% of China Eastern, China Southern, Hainan Airlines, and Air China respectively.
Efficiency and Profitability
The airline industry passenger load factor was of 83,2% in 2019, same as in 2018. Did this load factor lead to profitability? Very much so: according to the CAAC report, Chinese airlines generated 648,7 billion CNY of revenue (=93,7 billion USD at the time of writing), an increase of 6,5% YoY. The level of profitability was of approximately 4,02%, equaling to 26,1 billion CNY of profits (=3,77 billion USD at the time of writing).
Some other interesting figures on Chinese airlines
According to the CAAC report, there were 4,6111 million commercial flights in 2019 (excluding cargo), among which 3,7652 million were on time. That’s 81,65% of flights that were on time. Among the reasons for delays/cancellations, the weather accounted for 46,49%, the airline for 18,91%, and air traffic control for 1,43%. From my personal experience of flying (mostly in Shenzhen Bao’an, Shanghai Pudong/Hongqiao, and Beijing Capital airports), this seems like an surprisingly high number. I’ve had such bad experiences in flight delays in China, but maybe that’s just me. The constrast is also remarkable with Chinese trains, which comparatively are always on time.
Cities/Airports
In 2019, China continued its vigourous airport construction plan across the country, with another 126 airport construction projects underway according to the report. This reflects China’s ambition of fully interconnecting even the smaller cities in China by air, as mentioned in China’s 13th Five-Year Plan. There were 238 commercial airports in 2019, +3 more than the previous year. A point of comparison would be the number of primary airports in the USA (>10 000 passengers/year), at 371 in 2016 [2]. This may be comparing apples and oranges, as we don’t know what the CAAC report considers as a “commercial” airport. Again, the potential of growth in China is huge: while both the USA and China are similar geographic-wise, China has a population of 1,4 billion, and over 300 cities of 1 million inhabitants to interconnect [3].
On a more architectural note, notable new Chinese airports in 2019 were the surprising mountain-top Chongqing Wushan Airport (Fig. 4), as well as the architecture gem by Zaha Hadid, Beijing Daxing Airport (Fig. 5).
Interestingly, among the 238 Chinese airports, over half were situated in China’s western regions (121), while only 36 and 54 were located in China’s central and eastern regions. This is all the more surprising because China’s eastern regions are the most populated and economically developed, by far.
Several points can explain such a contrast:
- In western regions, travelling east by China’s high speed rail (HSR) makes less sense as the distance between eastern and western regions can easily reach 2000 km. Previous Chinese studies showed that HSR had a strong drop in attractiveness for Chinese travellers above the 1500 km mark. Another point is many of these smaller cities may not be interconnected with the Chinese HSR network just yet. Many of them, due to geological reasons such as mountainous terrain, are unsuitable for HSR and thus air travel makes more sense. Building airports in these small to medium cities (1-4 million people for China) is also a way for the government to develop the interconnection with the wealthier eastern metropoles.
- Despite the domination of the western provinces in the number of airports, these airports are small, and in reality eastern province airports overwhelmingly dominate in terms of actual traffic (see Fig. 6). The airports of Beijing, Shanghai and Guangzhou are the mega-hubs of China, representing alone 22,4% of all Chinese passenger traffic in 2019.
Any thoughts on the figures here, or personal experiences to share about flying in China ? Leave a comment in the comment section below.
References
[1] Preliminary Estimated Full Year 2019 and December 2019 U.S. Airline Traffic Data, January 2020, Bureau of Transportation Statistics
[2] Airport Rankings 2016, Bureau of Transportation Statistics
[3] 中国城市人口排名表, Baidu Baike, in August 2020
[*] The CAAC Aviation Industry Report 2019, to which I unfortunately don’t have a link
