US Airlines are Losing Interest in China, and That’s Bad for China’s Carriers

China is the next big thing. That was true 15 years ago, and may still be true 15 years from now (without ever actually becoming).

Aviation between the US and China has growth tremendously. Some of that makes sense as China has grown:

  • Over the past 14 years China-originating traffic has grown from 250,000 a year to 3 million a year
  • China as a business destination has grown as well, though not at the same pace.

During that time the number of flights between the U.S. and China has quintupled. Some of that consists of secondary routes as Chinese airlines squat on flights they might want to operate in the future. The Chinese government has only permitted one national carrier to fly each route between China and the U.S. so an airline needs to start a route before someone else does and operate it even if it is not profitable (although there’s been talk of relaxing this policy).

In addition to flights between major US cities and Beijing, Shanghai, and Chengdu,

  • Hainan Airlines flies Changsha–Los Angeles as well as Chongqing–Los Angeles and New York
  • Sichuan Airliens flies Hangzhou-Los Angeles and Jinan-Los Angeles
  • Xiamen Airlines flies Shenzhen–Seattle, Fuzhou–New York, and Qingdao–Los Angeles

Air China almost only flies between major U.S. cities and Beijing, and Marisa Garcia finds their head of North America throwing shade at some of the other airlines in China,

We don’t play sleight of hand, especially we don’t play financial sleight of hand. We run a great airline, and we offer great service. We’re not going to cut back, and we’re not taking any handout from anyone. We’re totally clean. We’re competing in a marketplace. Other carriers, I’m not going to comment on.

American carriers used to operate two-thirds of the flights between the U.S. and China, and now that’s flipped. And to hear Dr. Zhihang Chi, Vice President and General Manager of Air China North America, tell it “the US carriers are losing interest in the China market.” That’s a bolder claim than is likely accurate, but there’s some truth.

Delta of course remains closely linked to China Eastern, and American is expanding its modest codeshare with China Southern, but the lack of aggressive growth by US airlines may also cap the growth of Chinese airlines.

Without US airlines pushing the government here to renegotiate its bilateral treaty with China to allow for more flights (if they don’t want to grow they won’t want more flights), it’s unlike that China will be able to secure the right to add flights from its side of the Pacific.

There’s more than enough flights between the US and China today to cover origin and destination traffic. And only Delta, through its China Eastern stake, is really poised to benefit from connections beyond China (United has a partnership with Air China through Star Alliance and American a very small piece of China Southern though doesn’t even fly to its biggest hub).

However Chinese airlines are looking to supplement carrying Chinese passengers between China and US with connecting traffic from elsewhere in Asia. And that’s something US airlines are likely to largely lobby against.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. @ Gary — The US airlines are smart. I’ve been to China, and I have little desire to return. I’d gladly go to Hong Kong, Japan, Thailand, Singapore, Korea, etc. any day of the week, but China not so much.

  2. Air China is not exclusively flying to Beijing from the US. They have LAX to Shenzhen and San Jose to Shanghai (though that one will end in a week).

  3. Because government subside. Chinese airlines has more competitive than US airlines. Chinese companies are good at price war, like Huawei and ZTE, due to cheap labor and government support, they likely get more tax deduct or tariffs reimburse if they earn more foreign currency back to China.
    Toady, the return ticket between China and US lower at 400$, US airlines can not make profit with that.

    Another reason is Chinese visitors and immigrants from China is more more than the people from US (Non-Chinese Americans), they are prefer Chinese airlines more than US airlines.

  4. Also The slot system of China is very secretive. So why would the US carriers expand the bilateral with China when they might not even be able to get slots while Chinese carriers seem to have no problem getting them. And the Chinese carriers can lose millions of dollars and the communist party pays the bills since they own the big three carriers of China.

  5. I regularly fly between San Francisco and Wuhan, China for business. I used to have problems flying UA to Beijing or Shanghai and missing my connection. Then China Southern added a direct flight between San Francisco and Wuhan. I’ve only met a handful of Americans who have even heard of Wuhan, although it’s larger than the Bay Area.

    I gather that this flight is subsidized by the regional government. Lots of Chinese Americans on the flight as well as people taking advantage of the cheaper fares e.g. Americans going on to Thailand and Indians going on to India. I’d prefer to fly UA but the fare + connection are an impediment. Some of my peers fly UA anyway.

  6. I would not fly China based airlines nor do I have interest in flying to the Mainland. The level of pollution is unsafe and as Gene points out there are far nicer places to visit in Asia.

  7. +1 to Gene
    I love Asia, but I loathe traveling to Mainland China. That being said, I don’t think my opinion of China drives flight decisions on US airlines.

    I also agree that while China is not a destination I like, their airlines do generally provide good service.

  8. I assume the reason US airlines may be losing interest in China is that competition from a growing number of Chinese carriers limits profit margins. That’s what competition does. Competition benefits consumers not companies. The government-sanctioned oligopoly at home has worked out so well for the Big 3 US airlines, apparently they now believe excess profit is normal.

  9. @John, yep that’s why Warren Buffett says airlines are the quickest way to become a millionaire. Just start with a billion dollar investment. Must be all that excess profit over the years.

  10. If you hate traveling to China, you just haven’t been to the right places. And I am not Chinese, just spent 3 weeks in China and loved it. Plan to be back to explore northern China and Mongolian autonomous region.

    Here are a few suggestions with little pollution:

    Plenty of national parks in Sichuan province e.g. Jiuzhai Valley National Park (google it and be spellbound)
    Dazhai (amazing rice terraces that will blow your mind)
    Xingping (on Li river)
    Shangrila and the entire area around Kunming
    Yellow Mountain area

  11. @weever: I’ve usually found Air China more expensive than Delta, at least in biz. Definitely can see that the local population has a preference for Air China, but there are very good reasons why. First of all, there’s price (as you mentioned) and service, but routing is a big plus. Unlike Delta, you can get to LA or NYC nonstop. Beijing to LA in 12 hours vs 15 hours (and a plane change) in Delta is significant. 12 hours to NYC vs 18+ (and plane change) is even more significant.

    @bsp: I agree with you. The only disadvantage I find with Air China is that their FFP really sucks.

  12. @J.C.
    So what is good to do is fly other carriers, credit miles to US airlines, then redeem on other carriers again.

  13. I think that people are still traveling to China. It’s just that the prices of the Chinese carriers make it hard for US carriers to compete. How can you make a profit when you’re charging $1,000 for a ticket that can be found for $500 with a Chinese carrier?

  14. @bsp: Unfortunately I only collect Delta miles and Air China isn’t compatible. 🙁

    The Chinese airlines that are compatible suck sewer water.

  15. Leaving Tsarina @JC aside, the Chinese do game the system to favour their companies. Adding in to that, a lot of Chinese would rather fly one of their own nations carriers rather than a foreign owned one.
    Combine the above with the fact that the US3 have a sub par product especially in economy, it explains why the US3 aren’t interested anymore

  16. @747alwaysपीडोफाइल: Knew you’d be here. No kiddies for you to molest so you’re here posting as though you’ve flown commercial.

  17. @JC proves he skankiness once again! Please go on. The hilarity of your inane responses, combined with your supposed English language skills are very enjoyable reading. Hahahahahaha

  18. Yes dear @JC. I was just quoting you. Guess you’re the one who needs to stick to water buffalo.
    Hahahahahahaha

  19. @747alwaysपीडोफाइल: Jethro, when quoting we use quotation marks. I know it’s a big 3-syllable word for you and it causes your extra chromosome to overheat, but at least try. If you put half as much effort into English as you put into molesting little kids, you wouldn’t appear as a boy-clown.

  20. @JC you would do better to earn your English and learn the difference between you’re and your before attempting to pontificate. Hahahahahahaha

  21. @747alwaysपीडोफाइल: Poor little water buffalo boy, did someone step on your itty-bitty ego, Jethro? Don’t be ashamed of your life on the pig farm. Once you stop molesting kids, your life will be worth something. Not much, mind you, but something.

  22. US and China combined have 1.7 billion people. The US accounts for 19% of this. Why do the US airlines have almost double their natural share?

    Also, you stated that the market went from 250,000 passengers to 3 million, about 8x, but the number of flights quintupled. How is that possible without A380s?

  23. “Over the past 14 years China-originating traffic has grown from 250,000 a year to 3 million a year.”

    12X growth in 14 years is startling! More important I have read somewhere that air traffic in China is about to surpass the US. That’s one of the indications of size of an economy and means China is about to surpass the US as the world’s largest economy.

    I recently noticed a Chinese line now has a 5th Freedom flight Zurich to Prague. They are building their capacity up for foreign operations too.

  24. @tassojunior: Barring economic barriers, air traffic in China should continue to grow. With a population approaching 6 times that of the US and more each year reaching higher economic levels, it’s difficult to see how air traffic could possibly fail to surpass the US.

    With dirt-cheap airfares, traditional / cultural stimulants for travel, cheap and interesting nearby international travel destinations and a public curious to explore the world, I’d be surprised if China won’t soon be a global travel and tourism powerhouse far surpassing any other.

  25. Oh dear Tsarina @JC, by claiming you pay someone for sex, you are supporting prostitution. Keep up the good work, dear Bhadvi.
    Well done. Keep spreading the hate, dear “feminist”. Youre more like Kellyane Conway. Namely, someone who claims to be feminist but supports misogyny and human trafficking. Cheers!

  26. A smart way for US carriers to make money would be to send @JC on any Chinese airlines flights. The odour, combined with her predilection to ask people to boink her would drive all pax away.
    PS @JC, how much English did you earn last night? hahahahaha

  27. @747alwaysपीडोफाइल: Water-buffalo boy, is it a struggle for your extra chromosome to keep up? Or were you too busy upskirting 6-year-old girls in the park again?

    By the way, Babar Babu, I only support your mother. She’s stuck back in your shithole India and needs a few quid to keep food on the table. Not like your inmate fund can support her. If she only knew who your father was. “Youre like”? Babar Babu, you’d make more sense if you just spoke your native pig language.

  28. Little @JC shows her off transphobia, and anti Muslim bigotry. Try harder. I come for a country of many religions, you racist piece of cow poop. PS. Picadilly square got emptied as you opened your legs to earn some english there last night. hahahahahaha

  29. PS. Since youre in the USA dear Tsarina of Skank, pray tell us how you teleported to India! Hahahahahahahaha

  30. @747alwaysपीडोफाइल: Babar Babu, ask your cellmate to help you find where I said I was in India now. Where did I mention the last date I was in India? It’s just like all you shithole country pig-farmers to misunderstand simple English.

    “Youre in the USA”, nonce? Picadilly Square? Well, we’ve determined you have a water buffalo’s concept of continents. Not surprising, though, since you only put effort into fondling little boys.

    When you finish your sentence, will you move back to your shithole country? By then maybe China will have conquered it.

  31. Dear Tsarina, thanks for claiming India is a shithole country. Racism really suits your sunny personality and poor bodily hygiene.

  32. Ps. You’re the one who tries to “earn English” dear Tsarina of Skank. Hahahahahaha. And since my mum is in India you had to visit India if as you claim you slept with her night before last. Such poor cognitive skills as displayed by you show how Inbred you are. Hahahahaha

  33. PPS. You invented teleportation. So am I in the USA or in India or in Poland, @JC. Please tell me O Ye of the Stinking Maw

  34. @747alwaysपीडोफाइल: Babar Babu, three posts? Does your extra chromosome get overheated if you post just once, but using multiple sentences?

    It’s not racism if it’s true, water-buffalo boy. India is a shithole and precisely because of Babar Babu things like you.

    Night before last is the 22nd, Babar Babu, give your extra chromosome an extra snort of pig shit and show us where I said I was in India on the 22nd.

    Yes, for you, airplane travel might as well be teletransportation. It’s not like you have ever flown in your life unless it was prison transport. You aren’t allowed on commercial transport because the government knows you’d try to molest any kids on the flight.

  35. @747alwaysपीडोफाइल: Water-buffalo boy, didn’t your daddy teach you not to lie? Oh, wait … you don’t know which of your “uncles” is your dad. Typical shithole India situation, Babar Babu. You really need to loosen up that turban and let your extra chromosome breathe. Babar is your national shithole idol — the Elephant King.

    “Im, your, cant, thats”? Yeah, your a great teacher Babar. You teach perfect pig-farm shithole English. You molest little boys because they don’t look at you like a 4′ 6″ piece of illiterate shit, right?

  36. “the barred you”. That’s not even English dear Skank @ Jc. Keep displaying the so called superiority of your country. Lolololol
    Ps. As per you I come from a shithole country, hence my English can be bad. What’s your excuse dear j*zzbucket? Lolololol

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