SOURCE / COMPANIES
Stalled ‘Chunyun’ worries Chinese airlines on profits
Low ticket prices, limited travel put pressure on airline balance sheets
Published: Jan 14, 2021 06:43 PM

Passengers are boarding at Fuyang airport in East China's Anhui Province on October 27, 2020. Photo: cnsphoto



Sporadic COVID-19 cases in China have triggered a new round of protective measures, as Chinese governments both at the national and local level are encouraging residents to stay at the place for the Chinese New Year holidays. 

The Chinese New Year period, which was supposed to be the peak season for airlines, may dampen the airlines' hopes for turning a profit, and cast another shadow over their yearly performance. 

The years before the COVID-19 emerged, tickets typically sold out within days as millions of people need to travel during the period.

But the Global Times found that the tickets such as from Beijing to Nanchang in East China's Jiangxi Province on February 10, one day ahead of the Chinese New Year's Eve are still available with a discount, and some ticket prices have been reduced as much as 38 percent. The discount goes further closer to the start of the festival, and some could dive 64 percent to 530 yuan ($81). 

Due to people's reduced willingness to travel and more travel restrictions, some online travel platforms said there are still plane tickets available for popular Chinese New Year travel routes. "The peak time for the Chinese New Year ticket sale is yet to come," domestic travel platform Qunar.com told the Global Times. 

Stalled 'Chunyun'

"A stalled travel season will have a big impact on our peak season's performance," Zhang Wu'an, spokesperson of Spring Airlines told the Global Times on Thursday, adding the Chinese New Year travel rush, or "Chunyun," this year will see less transport than previous years.

The low travel peak season comes as China has set up a high-level government working group to supervise the emergency planning.

The work group said on Sunday that it encourages the people to limit Chinese New Year travel in a bid to reduce the risks of infection while traveling as the virus control is still complex. 

So far, 29 provinces are advocating residents and migrants to spend the Chinese New Year at the region, with Beijing the first to make the announcement, followed by other provinces such as Guangdong, Hebei and Henan. 

Even some Chinese business chambers based overseas are now advising business people to spend the upcoming Chinese New Year abroad instead of coming back home for the festival, such as the Chamber of Commerce in Wenzhou, East China's Zhejiang Province issued an epidemic prevention proposal last week to 1.75 million Wenzhou merchants worldwide, suggesting they don't come back home for the Chinese New Year in early February.

Companies are also encouraging workers to stay in the region, saying those who choose to stay will get cash in reward. 

Some domestic airlines also issued guidance on full refunds for flight reschedule. China United Airlines and Spring Airlines offered full refunds for rescheduling for flights to and from Beijing and Shijiazhuang, North China's Hebei Province. 

The 2021 Chinese New Year travel rush will kick off on January 28, lasting for 40 days until March 8. 

Zhang Boli, an academician with the Chinese Academy of Engineering, also warned that the free travel in Chinese New Year is not suggested, for the days are so cold which is favorable for the virus to survive. 

 

Profit concerns


The Chinese airline industry suffered through a turbulence 2020, which witnessed a dramatic drop in traffic in the first quarter, which gradually back to normal in following months with airlines struggling to make a profit. 

In November, although some carriers reported a net profit for the third quarter, three giants China Southern Airlines, Air China, and China Eastern Airlines revealed they achieved total revenue of 156.104 billion yuan in the first three quarters in 2020 with negative growth, and the total loss stood at 26.68 billion yuan.

Aviation is an industry rife with fierce competition, and the carriers have a heavy dependence on Chunyun, which can generate as much as half of their yearly profit in a good season, Lin Zhijie, an independent market watcher, told the Global Times on Thursday. He added that this year, stalled travel will have a huge impact on the airlines' finance, and make their lives harder.

In addition, low ticket prices also pose a heavy blow to airlines' profits as industry insiders said that the ticket prices are the slowest to recover, compared to the recovery of passenger traffic and the number of flights.

The shining line remains the stable load factor, with passenger load factor stabilizing at around 70 percent starting in the second half of 2020, information provider VariFlight showed on Thursday.

The Civil Aviation Administration of China (CAAC) said that in the fourth quarter of 2020, total civil aviation transportation turnover recovered to 76.3 percent of the year-earlier level, with passenger and cargo transport recovering to 84.2 percent and 95.8 percent, respectively.

Domestic airline transportation in the fourth quarter recovered to 94.5 percent year-on-year, CAAC said.

Global Times
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