The Chinese government will provide 11 billion yuan ($1.64 billion) in subsidies to three major Chinese airlines and Beijing Capital Airport in the wake of COVID-19 and prolonged shutdowns in China. The largesse comes from the Civil Aviation Administration of China, which posted the news on the Chinese Transport Ministry website on Wednesday.
Three Chinese airlines are benefiting from the current round of funding from the Chinese government
Air China, China Eastern Airlines and China Southern Airlines will each raise $450 million, while Beijing Capital Airport (PEK) will receive $300 million. The grants come as the Civil Aviation Administration of China says the number of commercial passenger flights each day has remained above 10,000 since the start of July and the overall recovery continues to improve. The Chinese government, through various proxies, holds majority stakes in all three airlines.
According to OAG data, Chinese airlines offered more than 15.4 million seats in the week starting July 11. That’s up slightly from the same week in 2019. But only 112,597 international seats are available to and from China this week, down 94.5%. compared to the same week last year. OAG says there has been a rollercoaster of capacity changes in China this year as shutdowns and other restrictions come and go. While welcoming the recovery of China’s domestic air travel market, OAG analysts believe there will be more lockdowns in China and more capacity disruptions as that country pursues a COVID-zero strategy.
China Southern Airlines is one of the beneficiaries of the Chinese government’s generosity. Photo: Getty Images
“In the first half of the year, the civil aviation industry was repeatedly hit by the epidemic, and the civil aviation administration coordinated relevant departments to issue relief policies to help In terms of financial credit, the Civil Aviation Administration, based on the 65.6 billion yuan ($9.76 billion) of emergency loans for airlines and airports, s ‘is also working to secure an additional 150 billion yuan ($22.31 billion) in emergency airline loans,’ said a statement from the Chinese Ministry of Transport.
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The statement added that in the second half of 2022, the Civil Aviation Administration will continue to help the local aviation industry while actively expanding investment in civil aviation.
Long-haul international travel remains at an impasse in China. Photo: Getty Images
China bounces back but could be challenged
Earlier this year, with continued lockdowns in some of China’s biggest cities, the number of daily flights in China fell below 3,000 at times. Song Zhiyong, head of the Civil Aviation Administration of China, recently admitted that Chinese carriers have racked up losses exceeding $44.5 billion since the start of the pandemic.
While the Chinese government will not commit to a firm date for the reopening of the country’s borders – and the most pessimistic commentators believe that China could remain closed until mid-2023, there is a lot of confidence in the long-term viability of the Chinese airline industry. The Chinese government cites the recent successful Airbus order as proof of this. Airbus itself estimates that China will need more than 8,400 new aircraft over the next 20 years.
But apart from China, some industry experts suggest that India is likely to overtake China as Asia’s top aviation market. The Indian airline industry is firmly on the rebound, including in the international market. There is a view that India can catch up to while China dithers over the all-important reopening of borders and gets its international networks up and running again.