Despite China’s borders reopening and relaxation measures implemented in January 2023, the nation’s three state-owned airlines—Air China, China Eastern Airlines, and China Southern Airlines—all concluded 2023 with losses, albeit with narrowed deficits.
With domestic air traffic surpassing pre-pandemic levels, the outcomes starkly depict the slow recovery of the carriers’ international operations. It could also signify revenue drainage as Chinese travellers opt for alternative airlines and transit hubs for destinations like North America.
Flag-carrier Air China witnessed a 346% year-on-year improvement in its international air transport revenue, accounting for only 15.9% of the airline’s total air transport income. Air China’s overall revenue surged by 166.7% year-on-year to CNY141 billion ($19.5 billion), with expenses also rising by 58.8% to CNY146 billion. Ultimately, the Beijing-based airline reported a net loss of CNY1 billion, a significant reduction from its CNY38.6 billion loss in 2022.
China Eastern also recorded a net loss of CNY8.8 billion despite a revenue increase to CNY113.7 billion, marking a 145.6% year-on-year improvement.
China Southern Airlines managed to reduce its net loss from CNY45.2 billion in 2022 to CNY1.56 billion in 2023. The nation’s largest airline observed a ninefold increase in its international capacity, with passenger demand (RPK) escalating by 14.5 times. Similar to Air China, international revenue contributed only 16.4% to its income.
“We will focus on establishing the high-quality Beijing hub, exerting every effort to secure time slots at Daxing airport, and enhancing transit capability,” stated China Southern, underscoring its commitment to the Greater Bay Area.
With the worst seemingly behind them, analysts anticipate Chinese carriers to regain profitability by 2024. HSBC projected in January 2024 that Chinese carriers are poised for a “record profit,” estimating a combined profit of CNY20.4 billion.
