During this year’s National Day holiday in China, which started on October 1st and lasted for 7 days, many Chinese people took the opportunity to travel. However, due to the continuous economic weakness in China and decreased consumer confidence, people are seeking cost-effective travel destinations.
According to data from online travel agency Trip.com Group, the booking volume for domestic and international flights in China during this period has seen a decrease of over 20% compared to the same period last year. This has resulted in a significant drop in ticket prices.
An article by Nikkei reported that a Chinese woman in her 30s working in Tokyo was surprised to find a ticket back to Shanghai for around 1,000 Chinese yuan, stating, “I’m amazed that the ticket is so cheap.”
The reason for the cheap airfare is attributed to the sensitivity of Chinese tourists to costs. For domestic travel, airlines have observed that if ticket prices are slightly higher than what consumers expect, they will opt for alternative transportation methods such as high-speed rail.
The three major state-owned airlines in China – China Eastern Airlines, China Southern Airlines, and Air China – all reported net losses in the first half of the year. HSBC also lowered the profit forecast for China’s low-cost airline Spring Airlines in September due to “downward pressure brought by low consumer confidence.”
In August, the consumer confidence index in China dropped from 86 in July to 85.8, only slightly higher than the record low of 85.5 during the pandemic in November 2022. The index measures consumer confidence on a scale of 0 to 200, with 100 representing neutrality.
External analysis suggests that the weak consumer confidence in China is mainly due to people facing losses in the real estate and stock markets, a rising unemployment rate, decreasing wage growth, and capital outflows under geopolitical tensions.
Currently, consumers in mainland China have become more frugal, impacting sectors such as dining and luxury goods. The year-on-year retail sales growth rate in August slowed down from 2.7% the previous month to 2.1%. Analysts believe that travel budgets may also be affected by this trend.