Chinese airlines offer cheap air tickets to survive in tough time

Cheap ticket prices are giving Chinese airlines a much-needed passenger bounce. A ticket from Beijing to Hangzhou in eastern China can be booked for as low as 180 yuan ($26). This is one of a slew of deals fuelling a robust recovery in Chinese passenger levels and which could provide a model for a beleaguered industry globally.

Led by China Eastern Airlines Corporation’s June offer of unlimited weekend flights until December 31 for 3,322 yuan ($485), domestic carriers have fallen over themselves to woo passengers back with bargain-basement fares. At the same time, China’s success in mitigating the spread of the coronavirus has helped consumers regain the confidence to travel.

Although the airlines are still loss-making and analysts say the recovery for China’s aviation market is fragile and subject to setbacks, the cheap airfare strategy is far more cost-effective than having planes grounded. It also provides a model for other countries to borrow from or even top.

“We may have reached the point where some airlines begin to pay for some people to travel, offering free seats and then seeking to generate ancillary revenues that support the service whilst at the same time rebuilding traveller confidence,” John Grant, OAG chief analyst said on his firm’s website.

Vietnamese budget carrier VietJet Aviation JSC has come close to doing that, offering fares for next year’s Lunar New Year holiday from 2,021 dong (9 U.S. cents) on all flights from north and central Vietnam to the country’s south.

In the United States too, radical moves are being made.

The country’s major airlines last week indefinitely scrapped booking change and cancellation fees.

While undermining the pricing model for business travellers who pay a premium for flexibility in ticket changes, the move aims to rekindle domestic demand that in July was 73% below 2019 levels.

In the United States and Europe where COVID-19 case numbers are much higher, airlines are still slashing their forward schedules and business travel remains at anaemic levels, according to data from OAG.

In contrast, Chinese capacity has snapped back to more than 90% of pre-pandemic levels due in part to a summer travel boom, OAG says. It is expected to recover to last year’s levels by the end of 2020, according to industry forecasts.

China Southern Airlines, the carrier with the biggest domestic market share, even returned to year-on-year capacity growth in August.

Reuters