China’s biggest airlines, including Air China, China Eastern Airlines, and China Southern Airlines, are facing a challenging summer travel season due to weakening demand and higher fuel costs.
Losses Expected
The three airlines have warned of combined first-half net losses of up to 9 billion yuan ($1.33 billion), a sharp reversal from their combined first-quarter profit. The losses are attributed to the dilemma of raising fares to recover higher fuel costs, which risks further weakening demand, or keeping ticket prices low and absorbing the additional expense.
According to Parash Jain, HSBC’s global head of transport and logistics research, a ‘negative wealth effect’ is reshaping Chinese consumer habits as economic growth slows. ‘The rising ticket prices are hurting demand and pushing people to use high-speed rail more for shorter distances,’ Jain said.
Industry Outlook
HSBC analysts expect China’s three biggest carriers to post combined losses of about 16.8 billion yuan in 2026, compared with the current market expectation for a combined profit of 1.3 billion yuan. The third quarter is typically the most profitable for Chinese airlines, but aviation data firm Flight Master is projecting traffic carried by Chinese airlines on domestic and international routes will fall 3.6% year-on-year to 142 million passengers in July and August.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
