Chinese airline industry could take years to recover from Covid-19


Passenger traffic at China's airports will fall by 30% this year due to the Covid-19 coronavirus, according to an analysis by the Colorado-based commercial aviation consulting firm Boyd Group International.

The crashing demand, the Boyd Group said, will likely lead to a restructuring of the Chinese airline industry.

"The China air transportation system that was in place in 2019 is gone," the analysis said. "The growth is evaporated. The international leisure segment -- inbound and outbound -- is gone, and will take years to recover, assuming that the Chinese economy does not continue to fray at the edges and at the core."

Air bookings have dropped more than 10% in the region, according to a report released by data analytics firm ForwardKeys.

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In 2019, Chinese airports serviced approximately 1.35 billion passengers, according to Boyd Group data. This year, that figure will drop by a whopping 414 million, the company estimates. Prior to the onset of Covid-19 the Boyd Group had projected passenger growth this year of 8.2% at Chinese airports.

The declines will be largest at airports in and near the Hubei province, where the virus originated, the Boyd Group said. But they'll also be in excess of 20% at China's four largest airports, including the two in Beijing, Shanghai's Pudong airport and Guangzhou airport.  

"In the real world of the airline business, this is a collapse, not a decline. This is in stark contrast to the past decade -- where the growth was 10% and higher year after year," the report said.

The precipitous drop in demand both domestically and from international destinations will cause catastrophic revenue drops, the analysis continues, thereby forcing the Chinese airlines into major restructuring.

Not all forecasts, however, are as dire.

"Over the next few months, we expect the pandemic to pass, and traffic to China to resume," Cowen Research investment analyst Helane Becker wrote in a Feb. 12 analysis. "We expect that by year-end 2020, traffic will be back to a normal pattern."

Approximately 75% of the Chinese air fleet is currently parked, Becker noted. But the Chinese government is working with airlines to provide emergency funding. In addition, aircraft leasing companies are working with carriers to ease payment burdens.


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