The Chinese are profiting from the ban on flying over Russia

31.08.2024. / 16:40

LONDON – Sanctions against Russia over the war in Ukraine include a ban on Western airlines flying over Russia. This increases the market share of Chinese carriers. But that is not the only reason why Western companies are in trouble.

Decisions by some Western airlines to reduce the number of flights to China this summer have raised questions about the future of travel to the country.

British Airways recently announced the suspension of flights between London and Beijing, after Virgin Atlantic withdrew its London-Shanghai route and Qantas decided to suspend flights between Sydney and Shanghai.

One of the most significant reasons cited by insiders from the aviation business is the ban on flights through Russian airspace, as well as the additional costs it imposes on airlines.

Western nations have imposed sanctions on Moscow following the Russian invasion of Ukraine, Russia has banned virtually all European and North American airlines from flying over its airspace.

Chinese airlines have not been affected by the ban, which has helped them take market share from Western competitors as they seek to expand their international operations.

However, slow economic growth in post-pandemic China continues to complicate the recovery of air traffic, while geopolitical tensions between China and the United States have also led to a reorientation of some airlines.

The ban on the use of Russian airspace, however, brought the most headaches. John Grant, chief analyst at aviation data firm OAG, said many Western airlines saw travel to China as “the candy of aviation” because it was possible to get there and back within 24 hours.

“Flights to Beijing and Shanghai used to mean perfect use of the plane,” he told DW. “The ban has added an extra five and a half hours to Beijing and back, and that’s a real challenge.”

Those extra hours in the air mean significant additional costs for fuel and staff, as well as potentially expensive juggling slots at busy airports.

However, the Russian airspace ban did not affect Australia’s Qantas airline, which announced in July that it was ending its Sydney-Shanghai service.

Ji Gao, an associate professor at Purdue University’s School of Aviation and Transportation Technology in the US, points out that Qantas has always had “limited” operations in mainland China and says it is not true that the recent reduction in flights to China by Western airlines is “widespread”.

However, he adds that increasingly strong competition from Chinese carriers is becoming an increasingly significant factor in the decisions of Western airlines.

“Competition of Chinese carriers plays a key role”, he told DW. “Chinese airlines benefit from a cost advantage, which allows them to offer more competitive airfares on routes to and from Chinese cities.”

Brendan Sobi, a Singapore-based aviation analyst, said increased competition likely influenced Qantas’ decision.

“They have difficulties in market competition with Chinese carriers“, he told DW.

Sobi believes a pre-pandemic trend that led to the rapid expansion of Chinese carriers is rekindling as travel demand in mainland China gradually recovers after years of pandemic restrictions.

“There is already a noticeable shift as Chinese carriers pursued strategic expansion in the international market in the few years before the pandemic,” he says. “After the pandemic, we see the same thing coming back. A lot of them believe that the issue of Russian airspace caused all this, which is certainly a factor for foreign airlines. But I think this trend would happen regardless.”

Chinese carriers have actually increased the volume of flights to European cities such as London, Budapest, Istanbul, Milan and Madrid since 2019. Sobi says that with the exception of the North American and Indian markets, the international capacity of Chinese carriers is now back to 2019 levels.

The pandemic has undoubtedly dealt a blow to China’s ambitions. Just a few months before the virus appeared, Beijing Dasing International Airport opened with great fanfare.

“The goal was to create a hub in Beijing and then again in Shanghai, where you could have international travelers connecting with domestic travelers or even international travelers,” John Grant said. “But the pandemic destroyed all that.”

Travelers from China have been the world’s biggest spenders in international tourism and airlines for years. However, the country’s strict pandemic restrictions have severely limited travel to and from China, as well as within the country, until 2023.

However, the strong international capacity of domestic airlines and their ability to sell travel to Chinese consumers – combined with pressure on Western airlines – means they are still able to increase market share.

While China’s domestic carriers’ routes to Europe are opening up, their North American market remains stagnant. This is partly due to the competitive struggle, and partly due to the existing geopolitical tensions between China and the US.

As Beijing imposed strict border controls due to the pandemic, travel between the US and China has been suspended. China wanted to return to the pre-pandemic number of flights, but currently it still reaches only 15 percent of that of 2019.

Washington is reluctant to increase the number of flights, especially given that market conditions suggest that it would favor Chinese carriers more than American ones at the moment – and it does not want that in a time of intense rivalry.

“American airlines such as United, Delta and American have absolutely no interest in introducing more flights to China compared to the current one, for the same reasons that European carriers are not interested in it either,” Grant said.

But while aviation experts agree that both post-pandemic travel habits and geopolitical issues are driving changes in the relationship between Western airlines and China, that market will always remain important to the biggest players.

Grant believes that global carriers such as Lufthansa, Air France or British Airways “will have to have Beijing in their network” in the long term. He believes that doing business with China is inevitable. “In time, they will all want to return to that market. It’s still a big market. It’s just not going to be what everyone expected.” Nurse said