The "Exodus" on China's Routes: A Trifecta of Geopolitics, Economics, and China's Rise

The "Exodus" on China's Routes: A Trifecta of Geopolitics, Economics, and China's Rise During the National Day holiday, many Chinese tourists chose to vacation in Europe, only to find that the number of direct flights had drastically decreased. This is just the beginning of European airlines scaling back their operations on routes to China

The "Exodus" on China's Routes: A Trifecta of Geopolitics, Economics, and China's Rise

During the National Day holiday, many Chinese tourists chose to vacation in Europe, only to find that the number of direct flights had drastically decreased. This is just the beginning of European airlines scaling back their operations on routes to China. As the holiday ended, Scandinavian Airlines announced the suspension of its Copenhagen-Shanghai route, a mere example of the many airlines announcing the halting of their China routes in recent months. From Germany's Lufthansa to Britain's Virgin Atlantic and Australia's Qantas, these "old friends" with decades of cooperation with China are all withdrawing. What exactly prompted this decision?

Behind the Airline Giants' "Exodus"

The key players in this "withdrawal" include well-known airlines like Scandinavian Airlines, Lufthansa, Qantas, and Virgin Atlantic. They have all announced the suspension or reduction of flights to China, with the most notable being Scandinavian Airlines, which will cease its direct flights from Copenhagen to Shanghai starting in November 2024 its only route to mainland China.

This "exodus" dates back to the beginning of 2024, when it did not attract much attention. However, as more airlines joined the trend, the situation became impossible to ignore. In just a few months, over 30 foreign airlines have stopped their operations in China, primarily impacting first-tier cities like Beijing, Shanghai, and Guangzhou, severely impacting air travel between China and Europe.

The Impact of the "Exodus"

For the general public, this "exodus" has brought about numerous effects:

• Extended Flight Times: What used to be an 11-hour direct flight to Europe may now take 1 to 3 days to complete. The reduction in direct flights forces passengers to endure longer layovers, even requiring multiple connections. For instance, a direct flight from Beijing to London, which used to take 12 hours, might now necessitate a transfer in Dubai, extending the total travel time to 20 hours or more. This not only represents a loss of time but also significantly impacts the travel experience, affecting both business trips and vacation plans.

• Increased Ticket Prices: The decrease in direct flights has led to a natural surge in the prices of remaining tickets. Statistics show that ticket prices for popular routes have risen by 30% to 50% compared to the same period last year. This not only makes personal travel more expensive but also significantly increases business travel costs.

• Chain Reactions in the Aviation Industry and Related Supply Chains: This large-scale withdrawal has also triggered chain reactions, impacting ground crews dedicated to international routes, airport shops, and tourism products related to international flights, all of which are facing decreased workload or sluggish business.

Complex Factors Behind the Scenes

While this withdrawal of airlines from China routes may appear as a business decision, it actually masks complex geopolitical and economic factors:

• Impact of the Russia-Ukraine Conflict: Due to the Russia-Ukraine conflict, many European airlines are forced to fly around Russian airspace, which increases fuel consumption and causes flight crew to work overtime, requiring additional staffing.

• Shifting Global Economic Landscape: The Russia-Ukraine conflict has also indirectly impacted the global economic situation, with energy prices continuously rising, further increasing operating pressure on airlines. Fuel costs now account for 25%-30% of airlines' total operating expenses, an increase of nearly 10 percentage points since the conflict began, adding to the burden on an already profit-thin aviation industry.

• Post-Pandemic Consumer Habit Changes: Post-pandemic, people's willingness to spend has decreased, and the anticipated "revenge tourism" boom has not materialized. Surveys reveal that over 60% of Europeans indicate they are unlikely to take a long-distance trip in the coming year. This shift in consumer behavior has resulted in fewer air travelers, making some already unprofitable routes unsustainable.

• The Rise of China's Aviation Industry: In recent years, Chinese airlines have experienced rapid growth, not only by improving service standards but also by modernizing their fleet. More significantly, they can fly over Russian airspace, giving them a significant advantage. Now, European airlines are facing intense competition from Chinese domestic airlines in the Chinese market, as well as the double pressure of declining overall demand and unfavorable geopolitical factors.

• Impact of China's Aviation Policies: Although China has lifted restrictions on the number of international flights, some airlines report that it is still difficult to obtain ideal take-off and landing time slots, increasing their operating challenges in the Chinese market.

Opportunities and Challenges for China's Aviation Industry

Facing the withdrawal of foreign airlines, China's aviation industry is presented with a "curveball" opportunity. This not only allows them to solidify their domestic route advantages but also creates conditions for them to compete for a larger share of international routes.

Chinese airlines are seizing this opportunity to continuously enhance their strengths, from introducing the latest passenger aircraft to meticulously designing route networks and comprehensively improving on-board service, each step laying the groundwork for future international competition. China's position in air rights negotiations is also expected to improve, paving the way for the opening of more international routes.

However, opportunities come with challenges. For China's aviation industry to stand out in this "major test," it still needs to make continuous efforts in various areas, including raising safety standards, optimizing management efficiency, cultivating international talent, and promoting green aviation development.

Future Outlook

As the situation continues to evolve, the future landscape of the international aviation market is likely to undergo further changes. For the general public, this could mean fewer direct flights and potentially higher ticket prices. However, in the long run, these changes might also drive innovation and restructuring in the aviation industry, ultimately offering us more diverse choices.

Information Sources:

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