China Civil Aviation lost 10 y
次 【 2023 is the fourth consecutive year of losses for China’s civil aviation.
In the three years since the epidemic, the entire civil aviation industry has accumulated losses of more than 400 billion. Although losses have been significantly reduced in 2023, it still has not been able to turn losses into profits. The entire industry has lost 28.8 billion, of which airlines have lost 17 billion.
Civil aviation passenger volume, especially international passenger volume, has not yet returned to pre-epidemic levels, which is one of the important reasons why airlines have not been able to turn around losses. By the end of 2023, international flight volume has only recovered to 55.8% of 2019 before the epidemic. A large number of wide-body aircraft originally intended to fly international flights were forced to return to the domestic market to compete for the market, which further affected the revenue of the domestic market.
However, from the perspective of aircraft introduction, by the end of 2023, the number of Chinese civil aviation aircraft will reach 4,200, an increase of 35 aircraft compared with 2022, and an increase of 382 aircraft compared with 2019. However, the number of passengers in 2023 will still be It has failed to return to the level of 2019.
"In the market analysis of the past two years, there is almost no need to consider the issue of supply. The supply must be excess and the growth of supply must be slow." Tang Chao, an insider in the civil aviation industry, told reporters.
Introducing while lying down
The COVID-19 epidemic that started in 2020 has had a huge impact on the civil aviation industry. In January of that year, flight volume and passenger load factor began to decline sharply. A certain airline's flight to Sanya even had zero passengers.
Then a large number of domestic flights were cancelled, because airlines found that the more they flew, the more they lost money. By the end of February, the Chinese market hit rock bottom and nearly 90% of flights were canceled.
As countries close their borders one after another, the volume of international flights has also begun to plummet. By April 2020, the Civil Aviation Administration of China began to implement the "Five Ones" policy to reduce international passenger flights in accordance with the work arrangements of the Joint Prevention and Control Mechanism of the State Council: each airline can only operate routes to any country in mainland China. , only one can be reserved, and each route must not operate more than one flight per week.
According to the Civil Aviation Statistical Bulletin, passenger traffic in 2020 was only 420 million, a 36.7% decrease from 2019. It was the first annual decline in passenger traffic since 1989. Among them, domestic routes completed 408 million passengers, a decrease of 30.3% from 2019; Hong Kong, Macao and Taiwan routes completed 961,300 passengers, a decrease of 91.3% from 2019; international routes completed 9.5651 million passengers, a decrease of 87.1% from 2019.
2020 is not the lowest point in passenger volume. Although passenger volume increased in 2021, it fell sharply in 2022. The annual passenger volume was only 250 million, which was lower than the passenger volume ten years ago. (In 2012, 320 million passengers were transported)
The rapid decline in flight volume and passenger volume has forced a large number of aircraft to stay idle. For example, Hainan Airlines revealed that at one time, 96 aircraft were parked for a long time. The industry's aircraft utilization rate also hit rock bottom in 2022, from more than 9 hours before the epidemic to only 4.35 hours.
While a large number of planes are hunkering down, the number of Chinese civil aviation planes is still growing during the three years of the epidemic:
At the end of 2019, the number of passenger aircraft of China's civil aviation was 3,645, which increased to 3,717 in 2020, 3,856 in 2021, continued to increase to 3,942 in 2022, and to 4,013 in 2023.
This is not unrelated to the time difference between aircraft ordering and delivery. After an airline signs an aircraft order, it will determine a future delivery date. If the airline does not want to receive the aircraft during the delivery period stipulated in the contract, it needs to communicate with the aircraft manufacturer to see if it can postpone the receipt. In view of the long-term cooperation, the manufacturer It will also be agreed to delay the delivery of some aircraft, but it cannot be postponed indefinitely.
The direct result of the extreme imbalance between supply and demand is that the industry has suffered huge losses for three consecutive years: a loss of 97.432 billion in 2020, a loss of 84.25 billion in 2021, and a loss of 217.44 billion in 2022. In three years, I lost all the money I made in the past ten years.
Entering 2023, with the relaxation of epidemic control, flying planes have gradually returned to the sky, and the number of domestic flights and passengers has quickly exceeded the epidemic period.
However, the resumption of international flights has been slower than expected. According to statistics from Flight Manager, the overall recovery of international civil aviation passenger flights in 2023 will be only 37.5% of that in 2019, from less than 10% at the beginning of the year to 55.8% at the end of the year.
The "ice and fire" pattern of domestic routes and international routes also means that the overall passenger traffic volume in 2023 will not exceed that before the epidemic, and will only recover to 93.9% of 2019.
However, the number of passenger aircraft at the end of 2023 will reach 4,013, 368 more than in 2019, an increase of more than 10%. The recovery of transport capacity is faster than the recovery of passenger volume, which has also prevented airlines' daily aircraft utilization and passenger load factors from returning to pre-epidemic levels: the average daily aircraft utilization rate of domestic airlines in 2023 is 8.1 hours, lower than in 2019 1.2 hours, with an average passenger load factor of 77.9%, 5 percentage points lower than in 2019.
"To see whether there is excess capacity, the core indicators are the daily aircraft utilization rate and the passenger load factor. The daily aircraft utilization rate represents the recovery rate of production capacity, and the passenger load factor represents the recovery rate of the market." Lin Zhijie, an insider in the civil aviation industry, told China Business News , he believes that if the daily utilization rate is more than 0.5 hours lower than in 2019 and the passenger load factor is 5 percentage points lower, there is still excess capacity.
Growth was already decelerating before the pandemic
Although the overcapacity in 2023 is closely related to the slow recovery of the international market and the continued delivery of new aircraft, if you look at the passenger volume and capacity growth data over the past ten years, you will find that before the epidemic, China’s civil aviation had already grown from double digits. Rapid growth slowed to single-digit growth.
The reporter checked the civil aviation statistical bulletin data since 2013 and found that before 2019, both the annual growth in passenger volume and the annual growth in capacity were more than 10%. For example, the average annual growth in passenger traffic in the five years from 2013 to 2017 11.5%, the year-on-year growth in passenger volume in 2017 reached 13%, and the year-on-year growth in 2018 was another 10%. The annual growth rate of capacity in the past five years has been basically the same as the growth rate of passenger volume.
However, starting in 2019, the growth in passenger volume fell to single digits, an increase of 7.9% compared with 2018, while the year-on-year capacity growth was even less, only 4.9%.
In this regard, Lin Zhijie analyzed that the single-digit growth in passengers in 2019 was due to market reasons, but it was mostly due to insufficient transportation capacity. The growth in transportation capacity in 2019 was far less than the growth in passenger volume. In the same year, the Boeing 737 MAX was criticized globally due to two foreign crashes. Related to the grounding, it is equivalent to reducing the introduction of 250 aircraft. At that time, a total of 97 737MAX aircraft of Chinese airlines were grounded, and the delivery of new 737MAX aircraft was also suspended.
The increase in capacity was much smaller than the increase in passenger volume, which also meant that China’s civil aviation still earned 54.13 billion yuan in 2019, an increase of 5.76 billion yuan from 2018.
However, many industry insiders pointed out to China Business News that the slowdown in passenger growth to single digits in 2019 is not accidental. China’s civil aviation has gone through a stage of rapid growth. The previous strategy of advanced introduction and advance development may not be the same. It should be adjusted accordingly.
"According to historical experience, there is a dynamic and stable elasticity coefficient between the growth rate of civil aviation passenger volume and the growth rate of GDP. This is the potential growth rate of the civil aviation market. We have calculated the growth rate of civil aviation passenger volume and GDP in my country since 1978. The data shows that the elasticity coefficient between the two shows a periodic downward trend, and has experienced two stages of ultra-high-speed and high-speed growth. Starting from 2019, it has entered a new medium-speed growth stage, with the elasticity coefficient remaining at approximately 1.3: 1." Tang Chao told reporters that my country's economy will grow by about 5% in 2023, but domestic civil aviation passenger volume will only increase by 1.5% compared with 2019, which is far from the potential growth level of my country's civil aviation market.
The Qunar Research Institute's report also has the same view: Before 2019, the growth rate of passenger volume in the domestic civil aviation market was almost twice the GDP growth rate. However, after the epidemic, this influence is gradually weakening. From the third quarter of 2023, Judging from the situation, compared with the recovery speed of domestic civil aviation passengers in 2019, it no longer maintains a growth rate twice that of GDP, but gradually approaches a one-to-one ratio.
As for 2024, which has already arrived, Song Zhiyong, director of the Civil Aviation Administration, predicted at the 2024 Civil Aviation Work Conference that transportation production in 2024 will return to natural growth. It is expected that the passenger transport volume on domestic routes will reach 630 million throughout the year, 7.7 percentage points higher than that in 2019. Coupled with the introduction of my country's visa exemption and a series of entry-exit facilitation policies and measures, the international passenger transport market will accelerate its recovery, and it is expected to reach a weekly volume by the end of 2024. There are about 6,000 classes, which has recovered to about 80% of the level before the epidemic.
However, many in the industry are still not optimistic about the market. According to the reporter's understanding, the general manager of a domestic airline company predicted at his internal annual work meeting that the industry will add 150 aircraft in 2024. The recovery rate of transportation capacity compared to 2019 will still be greater than the recovery rate of passengers, and industry competition will become more intense; From the demand side, the recovery momentum of consumption is less than expected. Multiple factors such as consumption downgrade and high-speed rail diversion will continue to coexist with the widening gap between supply and demand and insufficient market stamina.
Zou Jianjun, a professor at the Civil Aviation Administration of China, also believes that the air transport market may not perform too optimistically in 2024. The first quarter may be better than 2023, but the third quarter (the pent-up demand for the summer transportation in 2023 will be released intensively) It may be "unsatisfactory" and "climbing uphill and overcoming obstacles" will be a true portrayal of the industry throughout the year.
“The 2024 growth target set by the Civil Aviation Work Conference is that the total transportation turnover, passenger transportation volume and cargo and mail transportation volume will reach 136 billion ton kilometers, 690 million passengers and 7.6 million tons respectively. Compared with 2023, the annual growth rate must be respectively Reaching 14.4%, 11.3% and 3.3%, the benchmark for 2019 requires growth of 5.2%, 4.5% and 0.9% respectively. Although the growth rate is not large compared with before the epidemic, considering the current development of the global economy and aviation industry environment, the challenges in achieving the goals are still very big." Zou Jianjun further pointed out.
What to do in the future
“The current market is experiencing periodic excess capacity and slowing demand. For the industry, it is necessary to control the growth of transportation capacity to match market demand and avoid continued excess capacity,” Lin Zhijie suggested. “The second is to increase transportation capacity and market policies. Flexible deployment, because the market is currently experiencing uneven recovery of customer groups, regional imbalances, and stage imbalances. For example, on international routes, the recovery rate in some places has exceeded 100%, while in other places it has only recovered 20%. This requires We need to make flexible arrangements for transportation capacity and market sales, and we also need a green channel from the Civil Aviation Administration of China’s traffic rights and schedules policy, which is also a new test.”
It is worth noting that the "14th Five-Year Plan" for civil aviation development clearly mentioned that it is necessary to "scientifically regulate the total time and fleet introduction speed to ensure the dynamic balance of overall supply and demand." The plan uses 2019 as the base for 2020 The expected target for passenger traffic growth in the six years to 2025 is an average annual growth rate of only 5.9%.
"For the entire industry, the current consensus is to suppress the growth of supply and wait for the recovery of demand," Tang Chao told reporters. "In the three years since the epidemic, until 2023, the average annual compound growth rate of aircraft introduction in the industry is only 2.1. %, which is far lower than before the epidemic, and the average annual growth rate in 2024 and 2025 is also expected to be below 3%. In addition, the number of airlines voluntarily withdrawing from old aircraft will also increase."
According to a reporter from China Business News, China Southern Airlines sold 7 Airbus 330-200 passenger aircraft in 2023, and the company's wide-body fleet size decreased by 2 aircraft. The company will continue to choose opportunities to withdraw from some aircraft models in 2024 and reduce the number of wide-body aircraft. scale.
In the three years since the epidemic, the entire civil aviation industry has accumulated losses of more than 400 billion. Although losses have been significantly reduced in 2023, it still has not been able to turn losses into profits. The entire industry has lost 28.8 billion, of which airlines have lost 17 billion.
Civil aviation passenger volume, especially international passenger volume, has not yet returned to pre-epidemic levels, which is one of the important reasons why airlines have not been able to turn around losses. By the end of 2023, international flight volume has only recovered to 55.8% of 2019 before the epidemic. A large number of wide-body aircraft originally intended to fly international flights were forced to return to the domestic market to compete for the market, which further affected the revenue of the domestic market.
However, from the perspective of aircraft introduction, by the end of 2023, the number of Chinese civil aviation aircraft will reach 4,200, an increase of 35 aircraft compared with 2022, and an increase of 382 aircraft compared with 2019. However, the number of passengers in 2023 will still be It has failed to return to the level of 2019.
"In the market analysis of the past two years, there is almost no need to consider the issue of supply. The supply must be excess and the growth of supply must be slow." Tang Chao, an insider in the civil aviation industry, told reporters.
Introducing while lying down
The COVID-19 epidemic that started in 2020 has had a huge impact on the civil aviation industry. In January of that year, flight volume and passenger load factor began to decline sharply. A certain airline's flight to Sanya even had zero passengers.
Then a large number of domestic flights were cancelled, because airlines found that the more they flew, the more they lost money. By the end of February, the Chinese market hit rock bottom and nearly 90% of flights were canceled.
As countries close their borders one after another, the volume of international flights has also begun to plummet. By April 2020, the Civil Aviation Administration of China began to implement the "Five Ones" policy to reduce international passenger flights in accordance with the work arrangements of the Joint Prevention and Control Mechanism of the State Council: each airline can only operate routes to any country in mainland China. , only one can be reserved, and each route must not operate more than one flight per week.
According to the Civil Aviation Statistical Bulletin, passenger traffic in 2020 was only 420 million, a 36.7% decrease from 2019. It was the first annual decline in passenger traffic since 1989. Among them, domestic routes completed 408 million passengers, a decrease of 30.3% from 2019; Hong Kong, Macao and Taiwan routes completed 961,300 passengers, a decrease of 91.3% from 2019; international routes completed 9.5651 million passengers, a decrease of 87.1% from 2019.
2020 is not the lowest point in passenger volume. Although passenger volume increased in 2021, it fell sharply in 2022. The annual passenger volume was only 250 million, which was lower than the passenger volume ten years ago. (In 2012, 320 million passengers were transported)
The rapid decline in flight volume and passenger volume has forced a large number of aircraft to stay idle. For example, Hainan Airlines revealed that at one time, 96 aircraft were parked for a long time. The industry's aircraft utilization rate also hit rock bottom in 2022, from more than 9 hours before the epidemic to only 4.35 hours.
While a large number of planes are hunkering down, the number of Chinese civil aviation planes is still growing during the three years of the epidemic:
At the end of 2019, the number of passenger aircraft of China's civil aviation was 3,645, which increased to 3,717 in 2020, 3,856 in 2021, continued to increase to 3,942 in 2022, and to 4,013 in 2023.
This is not unrelated to the time difference between aircraft ordering and delivery. After an airline signs an aircraft order, it will determine a future delivery date. If the airline does not want to receive the aircraft during the delivery period stipulated in the contract, it needs to communicate with the aircraft manufacturer to see if it can postpone the receipt. In view of the long-term cooperation, the manufacturer It will also be agreed to delay the delivery of some aircraft, but it cannot be postponed indefinitely.
The direct result of the extreme imbalance between supply and demand is that the industry has suffered huge losses for three consecutive years: a loss of 97.432 billion in 2020, a loss of 84.25 billion in 2021, and a loss of 217.44 billion in 2022. In three years, I lost all the money I made in the past ten years.
Entering 2023, with the relaxation of epidemic control, flying planes have gradually returned to the sky, and the number of domestic flights and passengers has quickly exceeded the epidemic period.
However, the resumption of international flights has been slower than expected. According to statistics from Flight Manager, the overall recovery of international civil aviation passenger flights in 2023 will be only 37.5% of that in 2019, from less than 10% at the beginning of the year to 55.8% at the end of the year.
The "ice and fire" pattern of domestic routes and international routes also means that the overall passenger traffic volume in 2023 will not exceed that before the epidemic, and will only recover to 93.9% of 2019.
However, the number of passenger aircraft at the end of 2023 will reach 4,013, 368 more than in 2019, an increase of more than 10%. The recovery of transport capacity is faster than the recovery of passenger volume, which has also prevented airlines' daily aircraft utilization and passenger load factors from returning to pre-epidemic levels: the average daily aircraft utilization rate of domestic airlines in 2023 is 8.1 hours, lower than in 2019 1.2 hours, with an average passenger load factor of 77.9%, 5 percentage points lower than in 2019.
"To see whether there is excess capacity, the core indicators are the daily aircraft utilization rate and the passenger load factor. The daily aircraft utilization rate represents the recovery rate of production capacity, and the passenger load factor represents the recovery rate of the market." Lin Zhijie, an insider in the civil aviation industry, told China Business News , he believes that if the daily utilization rate is more than 0.5 hours lower than in 2019 and the passenger load factor is 5 percentage points lower, there is still excess capacity.
Growth was already decelerating before the pandemic
Although the overcapacity in 2023 is closely related to the slow recovery of the international market and the continued delivery of new aircraft, if you look at the passenger volume and capacity growth data over the past ten years, you will find that before the epidemic, China’s civil aviation had already grown from double digits. Rapid growth slowed to single-digit growth.
The reporter checked the civil aviation statistical bulletin data since 2013 and found that before 2019, both the annual growth in passenger volume and the annual growth in capacity were more than 10%. For example, the average annual growth in passenger traffic in the five years from 2013 to 2017 11.5%, the year-on-year growth in passenger volume in 2017 reached 13%, and the year-on-year growth in 2018 was another 10%. The annual growth rate of capacity in the past five years has been basically the same as the growth rate of passenger volume.
However, starting in 2019, the growth in passenger volume fell to single digits, an increase of 7.9% compared with 2018, while the year-on-year capacity growth was even less, only 4.9%.
In this regard, Lin Zhijie analyzed that the single-digit growth in passengers in 2019 was due to market reasons, but it was mostly due to insufficient transportation capacity. The growth in transportation capacity in 2019 was far less than the growth in passenger volume. In the same year, the Boeing 737 MAX was criticized globally due to two foreign crashes. Related to the grounding, it is equivalent to reducing the introduction of 250 aircraft. At that time, a total of 97 737MAX aircraft of Chinese airlines were grounded, and the delivery of new 737MAX aircraft was also suspended.
The increase in capacity was much smaller than the increase in passenger volume, which also meant that China’s civil aviation still earned 54.13 billion yuan in 2019, an increase of 5.76 billion yuan from 2018.
However, many industry insiders pointed out to China Business News that the slowdown in passenger growth to single digits in 2019 is not accidental. China’s civil aviation has gone through a stage of rapid growth. The previous strategy of advanced introduction and advance development may not be the same. It should be adjusted accordingly.
"According to historical experience, there is a dynamic and stable elasticity coefficient between the growth rate of civil aviation passenger volume and the growth rate of GDP. This is the potential growth rate of the civil aviation market. We have calculated the growth rate of civil aviation passenger volume and GDP in my country since 1978. The data shows that the elasticity coefficient between the two shows a periodic downward trend, and has experienced two stages of ultra-high-speed and high-speed growth. Starting from 2019, it has entered a new medium-speed growth stage, with the elasticity coefficient remaining at approximately 1.3: 1." Tang Chao told reporters that my country's economy will grow by about 5% in 2023, but domestic civil aviation passenger volume will only increase by 1.5% compared with 2019, which is far from the potential growth level of my country's civil aviation market.
The Qunar Research Institute's report also has the same view: Before 2019, the growth rate of passenger volume in the domestic civil aviation market was almost twice the GDP growth rate. However, after the epidemic, this influence is gradually weakening. From the third quarter of 2023, Judging from the situation, compared with the recovery speed of domestic civil aviation passengers in 2019, it no longer maintains a growth rate twice that of GDP, but gradually approaches a one-to-one ratio.
As for 2024, which has already arrived, Song Zhiyong, director of the Civil Aviation Administration, predicted at the 2024 Civil Aviation Work Conference that transportation production in 2024 will return to natural growth. It is expected that the passenger transport volume on domestic routes will reach 630 million throughout the year, 7.7 percentage points higher than that in 2019. Coupled with the introduction of my country's visa exemption and a series of entry-exit facilitation policies and measures, the international passenger transport market will accelerate its recovery, and it is expected to reach a weekly volume by the end of 2024. There are about 6,000 classes, which has recovered to about 80% of the level before the epidemic.
However, many in the industry are still not optimistic about the market. According to the reporter's understanding, the general manager of a domestic airline company predicted at his internal annual work meeting that the industry will add 150 aircraft in 2024. The recovery rate of transportation capacity compared to 2019 will still be greater than the recovery rate of passengers, and industry competition will become more intense; From the demand side, the recovery momentum of consumption is less than expected. Multiple factors such as consumption downgrade and high-speed rail diversion will continue to coexist with the widening gap between supply and demand and insufficient market stamina.
Zou Jianjun, a professor at the Civil Aviation Administration of China, also believes that the air transport market may not perform too optimistically in 2024. The first quarter may be better than 2023, but the third quarter (the pent-up demand for the summer transportation in 2023 will be released intensively) It may be "unsatisfactory" and "climbing uphill and overcoming obstacles" will be a true portrayal of the industry throughout the year.
“The 2024 growth target set by the Civil Aviation Work Conference is that the total transportation turnover, passenger transportation volume and cargo and mail transportation volume will reach 136 billion ton kilometers, 690 million passengers and 7.6 million tons respectively. Compared with 2023, the annual growth rate must be respectively Reaching 14.4%, 11.3% and 3.3%, the benchmark for 2019 requires growth of 5.2%, 4.5% and 0.9% respectively. Although the growth rate is not large compared with before the epidemic, considering the current development of the global economy and aviation industry environment, the challenges in achieving the goals are still very big." Zou Jianjun further pointed out.
What to do in the future
“The current market is experiencing periodic excess capacity and slowing demand. For the industry, it is necessary to control the growth of transportation capacity to match market demand and avoid continued excess capacity,” Lin Zhijie suggested. “The second is to increase transportation capacity and market policies. Flexible deployment, because the market is currently experiencing uneven recovery of customer groups, regional imbalances, and stage imbalances. For example, on international routes, the recovery rate in some places has exceeded 100%, while in other places it has only recovered 20%. This requires We need to make flexible arrangements for transportation capacity and market sales, and we also need a green channel from the Civil Aviation Administration of China’s traffic rights and schedules policy, which is also a new test.”
It is worth noting that the "14th Five-Year Plan" for civil aviation development clearly mentioned that it is necessary to "scientifically regulate the total time and fleet introduction speed to ensure the dynamic balance of overall supply and demand." The plan uses 2019 as the base for 2020 The expected target for passenger traffic growth in the six years to 2025 is an average annual growth rate of only 5.9%.
"For the entire industry, the current consensus is to suppress the growth of supply and wait for the recovery of demand," Tang Chao told reporters. "In the three years since the epidemic, until 2023, the average annual compound growth rate of aircraft introduction in the industry is only 2.1. %, which is far lower than before the epidemic, and the average annual growth rate in 2024 and 2025 is also expected to be below 3%. In addition, the number of airlines voluntarily withdrawing from old aircraft will also increase."
According to a reporter from China Business News, China Southern Airlines sold 7 Airbus 330-200 passenger aircraft in 2023, and the company's wide-body fleet size decreased by 2 aircraft. The company will continue to choose opportunities to withdraw from some aircraft models in 2024 and reduce the number of wide-body aircraft. scale.
The reason why the old aircraft models being withdrawn are mainly wide-body aircraft is because wide-body aircraft are mainly used to fly international routes, and the speed at which international routes are recovering has made wide-body aircraft more redundant than narrow-body aircraft, making them unable to fly internationally. The return of wide-body aircraft to the domestic market has also accelerated the “involution” of the domestic market.
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