Surging demand for China flights gives travel industry new hope

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BEIJING (BLOOMBERG) - China's biggest airlines could provide some much-needed encouragement for an aviation industry starved of good news when they report earnings later this week.. Read more at straitstimes.com.

BEIJING - China's biggest airlines could provide some much-needed encouragement for an aviation industry starved of good news when they report earnings later this week.

After being the first hit by Covid-19, which erupted in Wuhan in January, China is emerging from the crisis; it's the only major economy on track to expand this year. Businesses have reopened and people are traveling again after the government eased restrictions on movement, including for inter-provincial group tours. The FTSE China A 600 Travel & Leisure Index has climbed about 60 per cent in three months.

Some carriers including China Eastern have offered ticket deals that allow unlimited flights, sacrificing some of their bottom line to lure customers back. OAG Aviation Worldwide said scheduled capacity in Asia's biggest economy reached 15.6 million seats this week, only around 8 per cent lower than toward the end of January when the outbreak began. By contrast, US capacity is still down 43.1 per cent from January at 11.8 million seats.

Lower oil prices could also help numb some of the pain. Jet fuel fell to less than US$20 a barrel in May and is likely to average $45 in 2020, according to Paul Yong, a Singapore-based aviation analyst at DBS Group Holdings. Shanghai-based Spring Airlines has also had a strong run on the stock market, outperforming all others on a gauge of carriers in the Asia-Pacific region with a gain of 23 per cent so far this quarter. The budget airline is also due to report earnings at the end of this week.

 

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