China’s domestic economy continues to weaken, prompting passengers to seek lower airfares. Despite setting a new record high for passenger traffic this summer, with planes fuller than last year, the three major state-owned airlines in China reported a decline in third-quarter profits.
According to data from FlightMaster, a Chinese aviation data company, the average domestic airfare in China was 17% lower in July and August this year compared to last year, and 1% lower than in 2019. FlightMaster also reported that international airfares were 25% lower than last summer and 12% lower than in 2019.
Another aviation data company, ForwardKeys, stated that outbound airfare prices from China decreased by 39% from January to September this year compared to the same period last year.
The drop in airfare prices has eroded airline profits. Beijing-based Air China disclosed on Wednesday (October 30) that its third-quarter net profit was 4.14 billion yuan (approximately $581.34 million), lower than the 4.24 billion yuan in the same period last year.
China Eastern Airlines announced a third-quarter net profit of 2.63 billion yuan, reflecting a 28.2% decrease from the same period last year. Meanwhile, China Southern Airlines, the country’s largest carrier, reported on Monday (October 28) a 23.9% year-on-year decrease in third-quarter net profit to 3.19 billion yuan, despite strong market demand.
The Civil Aviation Administration of China stated in September that passenger numbers in July and August were 12% higher than the same period last year and 18% higher than pre-pandemic levels.
Data from China Southern Airlines indicated that the carrier increased capacity by 11% in the third quarter compared to the same period last year, with planes carrying more passengers on average than last summer. However, despite the increase in capacity, operating income only grew by 4.6%, indicating a decline in airfare prices.
A recent report by aviation data and consulting company Ishka noted a significant disparity between capacity growth and profit growth in China, suggesting that the situation in China is more severe than in other regions experiencing economic slowdown.
Ishka’s report mentioned that while the continued recovery of capacity post-pandemic has helped airlines recoup unsustainable losses incurred during the pandemic, these companies have not been immune to the adverse effects of China’s economic slowdown.
Spring Airlines, China’s largest low-cost private airline, recovered profitability earlier than full-service competitors China Southern, China Eastern, and Air China post-pandemic. However, even Spring Airlines could not escape the decline in profits in the third quarter, with data released on Wednesday showing a 32.4% year-on-year decrease in net profit to 1.2 billion yuan.
During the busy summer months of the third quarter last year, the three major airlines achieved their first quarterly profits since 2019, only to slip back into losses during the winter off-season. In March this year, the financial reports for 2023 revealed total losses exceeding 13.4 billion yuan for the three major state-owned airlines.
Despite the Chinese government’s efforts to stimulate economic growth, ongoing real estate crisis and high youth unemployment rates are restraining consumer spending in China.
The pressure of job scarcity is affecting a large number of Chinese citizens. The number of applicants for the national civil service exam in 2025 reached a historic high of 3.25 million, an increase of more than 340,000 from the same period last year. Some positions are highly competitive.
Notably, the position of Level 1 Chief Officer and below at the Chinese Professional Education Association has attracted 16,702 applicants, resulting in a staggering competition ratio of 16,702 to 1. This topic has sparked discussions online.
(Reference: Reuters)