Daily Memo: Don’t Bet On A Rapid Recovery Of China’s International Passenger Flights

China has a way of inspiring irrational exuberance in the aviation sector. 

In January, following the abrupt nixing of the zero-COVID policy, Avolon, the world’s number two aircraft lessor, predicted that China’s reopening to international travel could help global air traffic recover to pre-pandemic levels as early as June. 

That has not happened. To be sure, the global recovery is real, and has reached 88% of pre-pandemic levels by March, according to the International Air Transportation Association (IATA). But little thanks to China: the country’s international flights remain at just 30% of 2019 levels as of April, and at this rate Beijing may not reach its own target of 75% of 2019 air traffic by year-end. 

Several factors explain the slow resumption of China’s international flights. First, because Chinese leader Xi Jinping sought to eliminate the coronavirus until late 2022, the country went to extraordinary lengths to prevent outbreaks. Integral to this strategy was sealing China off from the world by severing its international air links. They stood at just 10% of pre-pandemic levels at the end of 2022. Reestablishing all these air links takes time.  

China has fallen back on its massive domestic aviation market, which thrived until the hyper-infectious Omicron coronavirus variant finally breached its defenses in 2022. China has recovered swiftly though. Domestic flight numbers surpassed pre-pandemic levels in mid-March, according to data firm Flight Master.

Second, during China’s long estrangement from the world, consumer behavior changed. The worsening economy—which grew at the slowest rate since the 1970s last year—is one factor. International travel is pricey compared to domestic travel, which boomed during China’s mostly COVID-free 2020-2021 and is now a more popular option than ever. The hotel group Accor estimates around three in four Chinese travelers will not leave the country in 2023. There is also a geopolitical factor. Compared to 2019, China faces a less-hospitable global environment. Majorities of respondents to a 2022 Pew Research Center survey in Australia, Europe, Japan, South Korea and the U.S. have an unfavorable impression of China. Whether Chinese tourists continue to favor these destinations as they did before the pandemic remains to be seen. 

Third, the Chinese aviation sector is grappling with a cabin crew shortage. In the past four years, China’s total flight attendants have fallen 11% to less than 100,000, according to the country’s Civil Aviation Administration (CAAC). This situation is not unique to China—most countries have faced similar difficulties emerging from the pandemic. However, it is surprising that analysts overlooked this issue when they made rosy forecasts. 

Fourth, China’s alignment with Russia in its invasion of Ukraine has implications for the resumption of passenger flights with the U.S. Direct flights between the U.S. and China remain in the low double digits, compared to 340 in 2019. One problem is that U.S. airlines that cannot fly over Russian airspace are at a disadvantage compared to Chinese carriers that can, and thus use more direct routes. American Airlines, United Airlines, and Delta Air Lines say that they are losing $2 billion annually as extra fuel needed for the circuitous routes takes up both cabin and cargo space. The U.S. airlines and their lobbying group Airlines for America want the Biden administration to ban Chinese airlines serving the U.S. market from using Russian airspace.

Tourism Economics estimates passenger flights between the U.S. and China will not return to pre-pandemic levels until 2028. That could be an optimistic assessment given the trajectory of the relationship between the world’s two largest economies. 

It is not just U.S.-China relations that are problematic either. Under Xi Jinping, Beijing has become more authoritarian and less market oriented, raising concerns about the country’s ability to continue driving commercial aviation demand. 

“China is going dark,” AeroDynamic Advisory MD Richard Aboulafia said in an April webinar. “It’s almost like they want to stop growing; they want to be less of a market economy ... The good old days of China being 23% of jetliner demand in the world—that’s going away for a while.”