The Asian economic downturn has begun to have an impact on the Chinese air transport industry, with the country's 11 largest carriers announcing for the first time a collective loss of ¥1.7 billion ($206 million) in the opening quarter of the financial year.
According to the state-run China Daily newspaper, the losses were incurred as a result of "-reduced corporate spending, massive layoffs, the Asia financial crisis, mounting competition from foreign airlines and rapid expansion of aircraft fleets and new airports".
Among the hardest hit are China's three traditionally profitable and main international carriers, Air China, China Eastern Airlines and China Southern Airlines. The airlines are reported to have lost a combined ¥840 million in the first quarter of the year, which will almost certainly result in a postponement of Air China's planned 35% share float.
Figures obtained by Flight International show that total passenger load factors for recently listed China Eastern and China Southern have slumped to 55.4% and 59.4%, respectively.
The news will result in further pressure from the Civil Aviation Authority of China for a clampdown on aircraft orders and an airline consolidation.
An expected order for 50 Boeing aircraft is likely to be slimmed to as few as 10. Beijing has also put a 20% cap on ticket discounting.
In return, airlines are seeking cost-cutting concessions, including an end to China Aviation Oil Supply's monopoly and an estimated 100% mark-up on fuel prices.
Source: Flight International
