Major global airlines are reducing services and, in some instances, withdrawing from China altogether. This is due to the closure of Russian airspace, which has raised operational costs, while demand has been low.
Virgin Atlantic and Scandinavian Airlines have completely withdrawn from China, while British Airlines has steadily downgraded the size of jets it flies into the country. This is a way to scale back capacity while retaining a presence on the route map. The situation is expected to worsen before it improves, as longer routes to Asia have increased fuel costs and the need for larger flight crews.
Demand in and out of China is a major issue, with the country’s economic problems dampening outbound travel and lackluster international interest in visiting China reducing inbound arrivals. U.S. airlines have not been hit as hard by the Russian airspace issue, but they too are retreating from the Chinese market, making “hard but very commercial decisions” to redeploy aircraft elsewhere. Meanwhile, Chinese airlines are increasing capacity to Europe, despite the lack of demand, in a desperate attempt to generate much-needed revenue.
