Caixin
Jun 17, 2019 07:44 PM
BUSINESS & TECH

China's Aviation Sector Flying High Again

A plane takes off at Chongqing Jiangbei International Airport on April 29, 2019. Photo: VCG
A plane takes off at Chongqing Jiangbei International Airport on April 29, 2019. Photo: VCG

China’s aviation market regained altitude in May after an earlier dip in passenger growth provoked fears that the long-running economic engine had stalled, although industry captains caution that the seatbelt sign remains on.

The Civil Aviation Administration (CAA) logged 54.5 million individual trips last month, a 8.7% increase over a year earlier and growing 4.1 percentage points more than April, a CAA representative said at a recent press conference.

In terms of passenger throughput, which counts both airport arrivals and departures, May saw 110 million trips, up 7.6% on last year and growing 3.9 percentage points more than the previous month. This followed two months in which throughput at several of China’s major airports saw negative year-on-year growth, bucking a decadelong trend going back to the 2008 financial crisis in which passenger growth across the sector has outstripped gross domestic product growth.

Passenger throughput declined by between 0.2% and 6.4% year-on-year at major airports in cities including Beijing, Kunming, Hangzhou and Qingdao in April, according to data provided by civil aviation data company VariFlight.

Some industry experts worried that the slowing growth might mark an inflection point for the industry, and that the aviation market’s growth would continue to decline in tandem with the country’s wider economic slowdown. The timing was also threatened to take the shine off news that the capital’s massive new Daxing International Airport had completed more test flights ahead of its opening later this year.

In an interview, Zhang Qing, an official with the CAA’s planning department, said that the recent drop in growth was down to the confluence of various factors, such as 15 days of thunderstorms in the country’s east and south interfering with flights and leading to cancellations, and Beijing Capital Airport’s temporary construction restrictions on its runways, leading to an 8.3% decrease in the number of takeoffs and landings at the country’s busiest airport. The extended May 1 annual holiday also led to some passengers delaying their journeys rather than taking them in April, Zhang said.

Zhang also mentioned that the CAA’s March 11 decision to suspend the commercial operation of China’s 96 Boeing 737 Max 8 airplanes due to safety concerns also caused disruption.

Yet some industry experts still believe the aviation market is in decline compared to a year earlier. “Although the May 1 holiday adjustment delayed some market demand from the end of April … the overall market performance in May did not meet expectations,” said Zou Maogong, an expert from industry platform the Civil Aviation Resource Net of China.

Zou Jiangjun, an expert with the Civil Aviation Management Institute of China, said that slowing growth in the aviation market should be expected given that China's economic growth has fallen from the 7% to 8% range to the 6.5% to 6.8% range since 2016. That the aviation industry has seen growth of 10% in this time is an exception. “It should be noted that this is not a normal phenomenon,” he said.

Other analysts are taking a more reserved attitude. “It’s hard to reach a consensus on short term fluctuations since we don’t have all the detailed data,” said Jeff Yu, a specialist in transportation logistics at consultancy Roland Berger. “Yet the present heated discussion is natural,” he added.

Contact reporter David Kirton (davidkirton@caixin.com)

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