No-fee flight refunds is a big blow for Chinese airlines
Published: Jan 26, 2021 09:06 PM

China's C919 jet performs in an air show during the 2020 Nanchang Flight Convention at Yaohu Airport in Nanchang, capital of east China's Jiangxi Province, Oct. 31, 2020. The C919, China's first home-developed trunk jetliner, conducted a successful maiden flight in 2017. The aircraft has begun intensive test flights from various airports to ensure it meets all airworthiness standards. (Xinhua/Zhou Mi)

The Chinese airline industry may face a big blow as the regulator said on Tuesday that tickets sold for the coming Spring Festival period could be refunded without charge, amid the background of low load factors and cheap fares caused by the pandemic. 

Tickets dated from January 28 to March 8 are subject to no-cost refunds, said China's civil aviation regulator on Tuesday, a move intended to minimize mobility during the Spring Festival holiday and reduce the risk of COVID-19 transmission.

Passengers who have bought tickets for the Spring Festival period can get refunds or rescheduled flights free of charge, according to a notice issued by the China Civil Aviation Administration (CAAC) on Tuesday.

The move is an extension of a policy issued by the CAAC on January 2, which told airlines to implement ticket refund plans for areas affected by COVID-19.

It's the second year for the regulator to release such a notice. The CAAC said as of February 15, 2020, the total tickets affected by the policy exceeded 20 million with a value of more than 20 billion yuan ($3.09 billion). 

The industry reported total losses of 39.8 billion yuan in the first quarter last year, including a staggering 33.6 billion yuan for Chinese airlines. 

"Chinese airlines' profits will worsen, as load factors and fares are already very low, and airlines will also face a cash crunch," Zheng Hongfeng, CEO of information provider VariFlight told the Global Times. 

CAAC predicted on Tuesday that the number of travelers in the coming 40-day travel peak will be around 39 million, almost the same as last year. 

Requests for refunds have increased three times compared with the previous period, and 78 percent of these requests have been resolved through an artificial intelligence self-service system, platform said in a note sent to the Global Times on Tuesday.

As of Monday, the average airfare had fallen to 651.36 yuan, the lowest for Spring Festival air travel in five years, said.

The fare from Beijing to Harbin, Northeast China's Heilongjiang Province on February 10, one day ahead of the Lunar New Year eve, is about 800 yuan or 45 percent off. The lowest fare from Beijing to Sanya, the hot travel spot in South China's Hainan Province, is around 700 yuan, 77 percent off, data from showed. 

Global Times