Qantas has confirmed it will launch daily flights between Sydney and Beijing from January 25, 2017, with services to the Chinese capital the next step in the Group’s strategy to tap into the exceptional growth of the Australia-China travel market.

The new service will operate into Beijing Capital International Airport, using an Airbus A330-200 aircraft, with return flights timed to connect with Qantas’ extensive domestic and trans-Tasman network. It marks Qantas’ return to the route for the first time since 2009 and makes Beijing the national carrier’s third destination in Greater China, including its existing daily return services to Shanghai and 28 return services a week to Hong Kong.

The new Beijing-Sydney service is part of the expansion of Qantas’ joint venture partnership with China Eastern Airlines which will also see three international codeshare routes between Australia and China being added under their strengthened agreement: Sydney-Hangzhou, Sydney-Kunming and Brisbane-Shanghai. China Eastern will also codeshare on this new Qantas Beijing flight.

Qantas Group chief executive officer, Alan Joyce said the new route – which equated to an additional 3,300 seats a week between Australia and China – would help the airline take advantage of surging travel demand. “The tourism industry in Australia is very excited about what the Chinese market will deliver over the next few years, especially given it’s already become our second biggest source of visitors after New Zealand,” he said.

“Australia is now at the top of the wish list for Chinese travellers thinking about where they want to go next. We’re seeing strong loads on our existing Shanghai and Hong Kong services, and on this new Beijing route we’ll have the advantage of China Eastern marketing the Qantas flight as part of their own network,” he added.

With Beijing home to around 21 million people the potential for the new route is clear. Qantas first served the city on the Melbourne – Sydney – Beijing routing using Boeing 747SP, 747-200 and 767 equipment through to August 1996 when it was switched to a one-stop Sydney –Shanghai – Beijing offer. This flight continued through to May 1999, and it was not until January 2006 with the return of a three times weekly Sydney – Beijing route that direct connectivity returned, albeit this route was closed in April 2009.

Qantas’ return to the Chinese capital will be supported by strong cooperation with Australian state tourism bodies and Tourism Australia on marketing campaigns in China to make the most of this potential. “The business travel market is another key focus for this route, particularly off the back of the free trade agreement with China, which is increasing the amount of freight we’re carrying,” added Joyce.

The new Sydney-Beijing route represents an 18 per cent increase in Qantas’ total capacity into Greater China and a seven per cent increase in its total capacity into Asia. This growth is part of the Qantas Group’s broader focus on Asia, with around 50 per cent of Qantas’ and Jetstar’s international capacity now dedicated to the region, compared with 30 per cent 10 years ago. Over the past 12 months, Qantas has added flights to Hong Kong, Singapore, Japan, the Philippines and Indonesia to meet growing demand in the region.

Including codeshare services with China Eastern and China Southern, Qantas offers more than 130 return services a week between Australia and China, connecting to a further 256 codeshare services a week on intra-China domestic routes. Jetstar Group airlines offer 20 return services a week into six Chinese cities from Singapore and Vietnam.

According to China Tourism Research Institute, China had 120 million outbound visitors in 2015 and they spent $104.5 billion, increases of 12 percent and 16.7 percent compared with 2014. The main driving forces for the increases included personal income rise, favourable policies, and appreciation of RMB. But, there is also inbound demand and Beijing is one of the most popular cities among overseas tourists with around 1.9 million overseas visitors in the first half of this year.

China is now Australia’s fastest growing major source market with annual visitor traffic now exceeding the one million figure, according to Australian Bureau of Statistics data. Speaking at the recent World Routes air service development forum in Chengdu, China, Tourism Australia managing director, John O’Sullivan, said that key to building a market now worth almost $8 billion annually to the Australian economy had been moving away from traditional group tours and aggressively targeting China’s rapidly emerging middle class.

“Our marketing, distribution and partnership strategies are all now geared towards targeting this new breed of young, independent traveller with the desire and the financial means to explore our country. That’s where we are focusing our resources and I’m delighted to say that is what is driving impressive results,” he said.

Tourism Australia has undertaken several recent initiatives to boost Chinese tourism and has also signed major strategic marketing agreements with China's largest carriers, including China Southern, China Eastern and Air China.

Chinese visitor arrivals into Australia have increased from 100,000 in the year 2000 to one million in the year ending January 2016, with an average annual growth rate of 18 percent since 2010. Arrivals grew two-to-three times faster in most months in 2015 than total overall arrivals to Australia with the majority visitors travelling to Australia on holiday (arrivals breakdown – holiday (53 percent), visiting friends and relatives (20 percent) and education (13 percent)).

China is Australia’s most valuable market, with Chinese visitors spending more than $7.7 billion annually. Spend has increased by more than 400 percent in the past 10 years, from $1.5 billion in 2005 to $7.7 billion in 2015. Year-on-year spending grew 43 per cent in 2015 – double the previous 12 month’s growth rate.

Under Australia’s long-term tourism strategy, the value of the China market was originally estimated to be between $7.4 billion and $9 billion a year by 2020. Annual spending has already exceeded the lower end of that original range, and more recent forecasts indicate the market could be worth up to $13 billion by the end of the decade.

Since the Chinese and Australian governments expanded their Air Service Agreement in January 2015 to allow more flights between the two countries, there have been strong interest from Chinese carriers to expand or start new services in particular from secondary ports in China. In 2015 direct capacity from China to Australia increased nine percent with more than 45 percent of visitors travelling on Chinese carriers, one in five with China Southern, which holds the strongest position in the market.

Using data from OAG Schedules Analyser our analysis shows that non-stop capacity between China and Australia has almost trebled (up 198.3 percent) over the past ten years and more than doubled (up 106.8 percent) since the start of the decade. Non-stop capacity will rise by a third this year (34.0 percent based on published inventories), rising from 4,500 flights and around 1.2 million annual one-way seats in 2015 to almost 6,000 flights and over 1.6 million one-way seats.

There are now 25 China – Australia city pairs with non-stop service linking 15 destinations in mainland China with seven in Australia. Sydney Airport alone is now linked directly with 13 Chinese airports, having grown from just three in 2010, five in 2014 and eight last year.

There are now nine airlines offering non-stop flights between China and Australia, a market still dominated by China Southern Airlines which continues to hold a 40 percent share of non-stop capacity. It currently links its Baiyun International Airport hub in Guangzhou with Adelaide (a new service in 2016), Brisbane, Melbourne, Perth and Sydney and Bao'an International Airport in Shenzhen with Sydney.