The deteriorating relationship between Japan and China due to the Taiwan issue has had a significant impact on the Chinese aviation industry. Several Chinese airlines have recently announced a reduction in the number of flights to and from Japan, with a sharp 56% increase in the cancellation of flights to Japan. This has raised concerns about the industry’s profitability, leading to a significant decline in the stock prices of Chinese airlines listed in Hong Kong.
According to reports from the Hong Kong stock trading service platform “Huashengtong” on the 25th, Chinese aviation stocks have defied the trend by declining. As of the time of reporting, China Eastern Airlines has fallen by over 7%, Air China by over 3%, and China Southern Airlines by nearly 2%.
Analyses from mainland Chinese media indicate that the primary reason for the decline in Chinese aviation stocks is the significant revenue contribution of the Japan routes to the international flight operations of many airlines. The concentration of flight cancellations or reductions implies a direct impact on passenger revenue, coupled with the strengthened expectations of declining demand, hence leading to a prevailing sense of pessimism in the market.
The Civil Aviation Administration of China previously issued instructions to several airlines to reduce flights to certain cities in Japan from immediately until March next year. Multiple routes will be temporarily canceled or significantly adjusted, including popular destinations such as Nagoya, Fukuoka, and Sapporo.
Reports from Caixin earlier indicated that there will be a reduction of 268 flights in mid-December between China and Japan, equivalent to about 47,000 seats.
Data from VariFlight shows that from November 24th to December 31st, the number of planned flights from China to Japan that were canceled increased by approximately 56% compared to the previous month, reflecting a downward trend in ticket bookings. As of now, ticket bookings for flights from China to Japan in the next 60 days have decreased by about 29% compared to the bookings during the same period on November 15th.
Furthermore, the Chinese Communist Party recently issued warnings advising citizens to avoid traveling to Japan in the near future, intensifying market expectations of a contraction in both leisure and business travel, further dampening the sentiment of airlines. Several travel agencies and some tourists have already begun to cancel or postpone their trips to Japan.
The combination of the various aforementioned factors has led to a decline in the stock prices of the relevant airlines.