Chinese carriers are launching an ‘air grab’ – and it could save you money

Pop quiz: how many British airlines fly to the world’s second largest economy and how many cities in that country do these airlines serve? Don’t be embarrassed if you guessed two – British Airways and Virgin Atlantic – and, say, half a dozen cities. China is a big place. The correct answers are: just one and one (or two if you include Hong Kong).

British Airways is the only UK carrier serving Chinese destinations. After axing its Beijing service last year, its sole destination on the mainland is Shanghai. Services to all other cities on the mainland had already been scrapped. Virgin pulled out of Shanghai last year and abandoned Hong Kong during the pandemic.

The picture from Beijing and Shanghai could not be more different. China’s state-owned Big Three airlines – Beijing-based Air China, Shanghai’s China Eastern and Guangzhou’s China Southern – increased scheduled services between China and Britain by up to 50 per cent last year, compared with 2019, according to aviation consultancy Ishka. Many Chinese carriers now offer three flights a day from London to Beijing and Shanghai.

Overall, BA and Virgin’s combined share of seats between Britain and China has slumped from 54 per cent in August 2014 to less than 15 per cent today, analysts at CAPA – Centre for Aviation calculate.

It’s the same story across Europe. Lufthansa, Scandinavian Airlines, and Poland’s LOT have all pulled out of China or cut services, prompting Chinese carriers to fill the gap. Air China has 32 routes and 53 daily flights to Europe. China Eastern serves 19 routes across Europe with 244 weekly round-trips. China Southern serves 11 destinations in Europe. Overall, Chinese airlines now account for 77 per cent of traffic between China and Europe, up from 50 per cent pre-pandemic, according to Piotr Grobelny, an aviation analyst.

What’s behind the dramatic shift?

Moscow banned most European airlines from Russian airspace in 2022 in response to western sanctions imposed following Russia’s invasion of Ukraine, but continues to allow Chinese airlines, the Gulf carriers and Air India. Flying south of Russia adds up to 2.5 hours to western carriers’ flights to and from Asia – it takes nearly 15 hours on the Shanghai route, compared with the usual 12.5. This drives up fuel bills and staff costs to uneconomic levels. “It’s not a level playing field” says Marjan Rintel, chief executive of KLM.

But there are other factors at work. The Chinese government has urged Chinese airlines to expand globally to re-establish the business and tourism links that were lost during China’s strict Covid lockdowns, kickstart the economy and burnish Beijing’s global standing. This year, Chinese carriers are expected to supply 63 per cent of the seats on flights to the mainland.

What do all these changes mean for passengers? The reverse of what you might expect. Less competition usually means higher fares. But fares from Britain to China can be very cheap, if you shop around on the websites of China’s airlines. A return can cost as little as £700 in economy. Overall, the big three Chinese airlines’ fares are five per cent to 35 per cent cheaper than those of European airlines for direct round-trip flights between China and western Europe, according to UBS aviation analyst Eric Lin.

This is not just because the flight times on Chinese carriers are shorter than on the western carriers banned from Russian airspace. The cost base of Chinese carriers is lower – around one third lower than their western competitors, on average. But be prepared for fewer frills for your cash. Chinese carriers do not all offer all the classes western travellers are used to, such as premium economy or first class.

Will the current situation last? European airlines have complained to EU regulators that Chinese carriers have an unfair advantage. Lufthansa says European airlines are “in an extremely unequal competitive position with China. The fact that Lufthansa now must remove one of its oldest routes, Frankfurt-Beijing, from its flight schedule shows how much the balance of international competition is shifting,” the airline said recently in a statement.

The European Commission promised in October to study competition in international air routes. But industry executives doubt Brussels will act. “You could make a case that the airlines that have been impacted by the political decision should be compensated,” says Willie Walsh, director general of the International Air Transport Association (IATA) airline lobby. “But I doubt there’s much appetite in the Commission or the European countries to do that.”

Walsh argues that the closure of Russian airspace “has nothing to do with safety, nor with security”. European airlines are “the victims of politics. I would hope that we’ll see an end to the war in Ukraine and that we will see a return to a more normal environment. Maybe that’s wishful thinking, but I would expect that’s what everybody wants to see.”

With Donald Trump now in the White House, Walsh – and the European carriers – might get their wish. Trump has made ending the Ukraine war a priority. We know now it will not be “on day one”, as he had promised, but diplomats say talks are likely to begin soon. BA’s Beijing service might be back by year end.