MIAMI – The aviation industry in China is taking off on a post-pandemic high. China Southern Airlines (CZ), the largest airline in the country, plans to take delivery of nine A321neo and two A319neo jets from Airbus. The new aircraft could replace the 24 Boeing 737 MAX airliners in its fleet that have been grounded since March 2019.
According to the South China Morning Post, CZ is issuing up to ¥16bn (US$2.37bn) of convertible bonds, using two-thirds of the proceeds to buy 11 planes, components, and maintenance services. The remainder of the funds raised will be used to buy back-up engines and replenish the airline’s liquidity, according to a statement by the airlines, based in the Guangdong provincial capital of Guangzhou.
“Having more narrow-body aircraft is the future as large aircraft are not efficient enough,” said Toliver Ma, analyst at Guotai Junan in Hong Kong. “As more newly added routes will be short distance or regional, airlines need smaller aircraft.”
It’s Different in China
In China, the situation is very different as the airlines in the country see a speedy recovery from the Covid-19 crisis. According to the Civil Aviation Administration of China (CAAC), over 13.26 million passengers traveled by plane during the national holidays, from October 1-8. The figure showed that it has reached 91% recovery compared to the same time last year with an average 79% load factor.
Chinese airlines have enticed passengers to return to the skies as the corona virus curve in China flattened. CZ has rolled out a domestic “unlimited airpass” to frequent travelers. Passengers who purchase one round-trip air ticket may be eligible to have unlimited travel to the same destination for US$7.50 each time afterward until January.
Meanwhile, Air China (CA) announced that it carried 7.8 million passengers in September, a 16% year-on-year drop. But demand increased by nearly seven percent compared to August. China Eastern Airlines (MU) said that it handled over 2.8 million travelers during the national holidays, according to the CAAC.
It’s Different in Hong Kong
In Hong Kong, however, the situation is more comparable to that in the rest of the world. According to asiaaviation.com, the Airport Authority of Hong Kong (AA) is extending the relief package for the airport community for another two months to the end of December 2020. This is in response to the ongoing challenges arising from COVID-19.
The waiver or reduction of various fees for the aviation industry announced in August this year will continue from November to December 2020. The continuing relief measures include:
- A full waiver of parking charges for idle passenger aircraft and airbridge fees
- The reduction of passenger aircraft landing charges
- A fee reduction related to ramp handling, maintenance and airside vehicles
- Rental reductions for terminal tenants covering lounges and offices
- Fee waivers for terminal licensees including ancillary passenger services, commercial services counters and cross-border transport operators
- And concessions on franchise fees for aviation support services such as into-plane fueling
Travel demand remains weak as a result of the continuation of Hong Kong’s entry restrictions for non-residents. Immigration restrictions and quarantine measures implemented in different countries and regions also play a role.
During September, passenger traffic decreased significantly in all categories, namely Hong Kong residents, visitors, and transfer/transit passengers, compared to the same month last year.
China Southern Airlines.Photo: Luca Flores