(MENAFN- Asia Times)
China's airlines hope to see an improvement in their businesses and reduce their losses this summer as the number of passengers has slightly rebounded since mid-May.
As of February this year, the country's airlines had suffered a combined net loss of more than 210 billion yuan (US$315 billion) since the outbreak of COVID-19 in early 2020, according to the Civil Aviation Administration of China (CAAC).
In a recent meeting, the CAAC told airlines that the government would provide some subsidies for them to maintain their businesses as they were hard hit by virus outbreaks and city lockdowns in the past few months. Passengers are also worried about flight safety after a China Eastern Airlines jet crashed in southern China's Guangxi region on March 21.
The Wall Street Journal reported on Tuesday that one of the Boeing 737-800's black boxes indicated that someone in the cockpit intentionally crashed the plane.
Since the first wave of the Covid epidemic was reported in Wuhan in Hubei province in January 2020, China's airlines have faced rising challenges due to a decline in the number of passengers. Last year, they continued to record losses.
A total of 3.78 million flights were recorded last year, up 7.5% from 3.52 million in 2020, according to an annual report for 2021 released by the CAAC on Wednesday. However, the 2021 number was only about 82% of that of 2019.
Chinese airlines recorded a combined revenue of 424.5 billion yuan last year, up 13.3% from a year ago. They lost a total of 67.1 billion yuan in 2021, compared with a loss of 82 billion yuan in 2020.
In the first quarter of this year, the number of domestic flight passengers fell 25.3% to 76.18 million from a year ago due to virus outbreaks in some cities in March, as well as the negative impact of the flight crash in Guangxi.
In March, the number of passengers dropped 67.9% year-on-year to 15.37 million, while the total flight time slumped 55% to 433,000 hours.
A research report published by Guotai Junan Securities said many Chinese airlines were having cash flow problems as the number of passengers decreased 80% last month from a year ago and was only about 17% of the level in 2019.
It said only 56% of seats on the top three airlines' flights were occupied.
Although the number of passengers recently rebounded to 30% of the 2019 level since mid-May due to the improving epidemic situations in Guangzhou and Shenzhen, many airlines would continue to lose money in the short run, it said.
Airport workers in hazmat gear disinfect a terminal building at Wuhan's Tianhe Airport. Photo: Xinhua
“China's aviation sector has faced unprecedented challenges as the number of passengers in May was about 23% of pre-pandemic levels,” said Lin Zhijie, an aviation industry analyst and a columnist at Carnoc.com, a major civil aviation website in China.“Government subsidies are urgently needed to help airlines turn around their worsening businesses.”
Lin said Chinese airlines had reported a combined loss of 35 billion yuan in the first quarter and cut some flights due to new challenges such as rising oil prices and yuan depreciation. He said government subsidies could help airlines survive and keep their staff.
On Monday, the CAAC held a teleconference meeting with domestic airlines and said the government would launch fiscal measures to support their businesses. Representatives of several airlines told Yicai.com that both private or state-owned airlines would be granted subsidies by the government based on their flight times.
They said they welcomed the subsidy, which is a more effective relief measure than tax reduction.
CAAC Deputy Administrator Lyu Erxue said on May 13 the government would take effective measures to help airlines resume their services as early as possible to fulfill their operational needs. Lyu said all these measures would be launched on the basis of ensuring flight safety.
On March 21, flight MU5735, carrying 123 passengers and nine crew, departed from Kunming, the capital of Yunnan province, at 1:11pm, but disappeared from radar at 2:23pm. Footage showed the plane dived vertically before it crashed into the ground in Teng county in Guangxi.
The CAAC later recovered both black boxes and sent them to the United States for data extraction. Citing some unnamed sources, the Wall Street Journal said Tuesday the plane took an intentional nosedive.
The CAAC said the investigation team in the US did not disclose any information to the media. China Eastern Airlines, which operated the flight, said any speculation would not help investigate the truth. It reiterated that the pilots had good health and financial records.
On May 12, a Tibet Airlines flight skidded off the runway and caught fire at Chongqing airport. All 113 passengers and nine crew on the jet evacuated safely. More than 40 passengers suffered mild injuries.
Meanwhile, China announced new guidelines on Thursday to slightly relax the Covid test requirements for incoming travelers from countries including the US and the United Kingdom.
From Friday, a negative PCR test result from seven days before the flight has been scrapped. But two PCR tests from two different laboratories, carried out within 48 hours and 24 hours before departure, are still required.
The relaxation would not help boost international travel to China, which still had stringent quarantine rules, analysts said. Last month, the number of international travelers at the airports in Beijing, Shanghai and Guangzhou was only about 2% of the 2019 level.
Read: Mystery enshrouds China Eastern plane crash disaster
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