China’s aviation industry is still struggling to recover after the pandemic. The latest financial reports show that Air China and China Southern Airlines have narrowed their losses in the first half of the year but have not been able to turn a profit, highlighting multiple pressures such as supply-demand imbalance, declining ticket prices, and insufficient international passenger flow.
According to reports from Reuters, Air China announced on Thursday (August 28) that it had a net loss of 1.8 billion yuan (about 252 million US dollars) in the first half of this year, a 35% decrease from the same period last year when it was 2.78 billion yuan. During the same period, China Southern Airlines reported a loss of 1.5 billion yuan, a 64% decrease from 4.21 billion yuan in 2024. Shanghai-based China Eastern Airlines will release its financial report on Friday. In July, they had warned that the loss could be between 1.2 billion and 1.6 billion yuan, lower than last year’s 2.77 billion yuan.
Airlines attribute their continued losses to supply-demand imbalance, increased passenger price sensitivity, and fierce competition brought by China’s high-speed rail network. Geopolitical uncertainties and weak recovery of international high-end passengers are also putting pressure on revenue.
The summer has always been considered the “golden period” for airlines, but this year’s performance has remained weak. According to Flight Master, a travel data platform, as of August 24, the average ticket price for domestic flights in China during the summer was only 788 yuan (about 110 US dollars), a 3.7% decrease from last year and 10.6% lower than pre-pandemic levels in 2019.
Although international capacity has returned to 93% of pre-pandemic levels, the yield remains low. Li Hanming, a travel aviation analyst, pointed out that challenges for the second half of the year are still significant: “Due to the lack of long-haul intercontinental flights, especially routes to North America, China is facing severe oversupply and cutthroat competition in the domestic and Asia-Pacific short-haul markets.”
While many major global airlines have returned to profitability, China’s “Big Three Airlines” (Air China, China Eastern Airlines, and China Southern Airlines) are still deeply mired in losses, indicating a sluggish recovery post-pandemic. Analysts believe that unless structural overcapacity and business model issues are resolved, profit margins will continue to be constrained.
Additionally, China Eastern Airlines is also facing governance pressure. In June, the Communist Party’s disciplinary agencies announced an investigation into former chairman Liu Shaoyong, citing “serious violations of discipline and law,” but details were not disclosed. Liu had been at the helm of China Eastern Airlines from 2009 to 2022, a period that included the MU5735 flight crash in which 132 people died. The final report on the accident has not been made public to this day, once again raising questions about the governance and transparency of Chinese airlines.