Epidemic May Cost Chinese Airlines $14B; Flight Activity Reportedly Rising

At China Southern Airlines they disinfect an aircraft's cabin to ensure passenger safety.
Credit: China Southern Airlines / Twitter

Chinese mainland airlines could lose almost CNY100 billion ($14.3 billion) if the coronavirus epidemic lasts 4-5 months, local aviation data company VariFlight said.

Airline activity is rising, however, and is now at about 50% of scheduled services.

VariFlight estimates the industry’s losses in January amounted at CNY1.3 billion. A steep decline in industry activity began Jan. 24, with the result being that throughout February most operations were halted.

The industry lost CNY37 billion in February, according to VariFlight’s estimates.

“We expect international and regional flights to remain near the trough of activity in March but the domestic market may recover a little,” VariFlight said, estimating losses for the month at CNY35 billion [in Chinese terms, “regional” flights are those to and from Hong Kong, Macau and Taiwan].

“If the epidemic is extended to 4-5 months, the industry’s income loss may near CNY100 billion.” The first COVID-19 case was discovered at the beginning of December 2019.

According to its schedule for the northern-hemisphere winter, the industry should have operated 16,900 flights on Mar. 1. Instead, it planned to operate 8,393 flights on that day, VariFlight said, or 49.7%, a significant improvement on the 30-40% seen in early- to mid-February.

Average aircraft utilization on Feb. 29 was 2.73 hours, up from 2.22 hr. on Feb. 23 and 1.36 hr. on Feb. 15. 

The viability of this activity is not clear, since China is now largely devoid of tourism traffic and business travel has been drastically curtailed. 

The industry has, however, been promoting charter services to carry people to the towns where they work from the hometowns at which they were enjoying the lunar New Year holiday when the virus became an emergency in the last 10 days of January.

—Research by Ryan Wang

Bradley Perrett

Bradley Perrett covered China, Japan, South Korea and Australia. He is a Mandarin-speaking Australian.