What's in store for China's aviation industry?
03/22/2019|11:44:40 AM|BTN

Despite the shaky trade relationship between the U.S. and China, demand for international air travel to China has remained strong. The future role of U.S. carriers in that market is more of a question mark.

The Chinese aviation market will see major growth over the next few years, as its three largest airlines—Air China, China Southern and China Eastern—all have ambitious fleet plans that will put their sizes at the top of airlines globally. China's major airports in Shanghai and Beijing are undergoing major expansion plans. Amid political uncertainty, the U.S. and China also could see an open skies agreement this year that would "fundamentally reshape the Asia/Pacific region," according to American Express Global Business Travel's 2019 Air Monitor report.

Airlines have made similar reports in recent earnings calls. Delta CEO Ed Bastian said revenue to China increased 27% year over year in the fourth quarter and that he expects a similar level of growth in the current quarter. United Airlines chief commercial officer and EVP Andrew Nocella said the carrier is monitoring business class demand levels for China but as of January "had yet to see any reduction in demand … resulting from these trade disputes."

While the growth rate of China's economy has been slowing, it remains high, Haxne said. Traffic on Asia/Pacific airlines rose 7.3% year over year in 2018, a slower growth rate than the previous year but still higher than all other regions, according to the International Air Transport Association. Traffic on domestic air travel in China rose 7.3% year over year, and capacity increased 9.8%.

As the Chinese carriers rapidly bulk up their fleets, it's not out of the question that U.S. carriers "mostly or completely will exit the China air market by 2030 and perhaps sooner," according to recent analysis by Forbes. However, outside those recent schedule adjustments, "we won't see a lot of changes from the U.S. carriers" for the present, said Mark Drusch former ICF aviation analyst and VP.

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