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Stalled holiday travel rush worries Chinese airlines on profits

01/18/2021| 3:32:56 PM|

Low ticket prices, limited travel put pressure on airline balance sheets.

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%. The discount goes further closer to the start of the festival, and some could dive 64% 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. 

Profit concerns

Aviation is an industry rife with fierce competition, and the carriers have a heavy dependence on the holiday travel rush, 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% 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% of the year-earlier level, with passenger and cargo transport recovering to 84.2% and 95.8%, respectively.

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

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TAGS: airline profit | holiday travel | spring festival
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