Chinese Airlines Soar as Eased Covid-19 Travel Rules Boost Market Confidence
Chen Shanshan
DATE:  Nov 30 2022
/ SOURCE:  Yicai
Chinese Airlines Soar as Eased Covid-19 Travel Rules Boost Market Confidence Chinese Airlines Soar as Eased Covid-19 Travel Rules Boost Market Confidence

(Yicai Global) Nov. 30 -- Shares in Air China, China Southern Airlines and other Chinese carriers all climbed today and yesterday as investor confidence in the civil aviation sector bounces back after Chinese authorities began to relax Covid-19 air travel restrictions.

Air China’s share price [HKG:0753] closed up 3.7 percent at HKD6.17 (USD0.79) today, after surging 5.6 percent yesterday. Spring Airlines’ stock [SHE:601021] closed up 2.6 percent at CNY56.66 (USD8) while yesterday it gained 6.4 percent. Hainan Airlines Holding [SHE:600221] edged up 0.6 percent to finish the day at CNY1.64, after advancing 3 percent yesterday.

In New York, China Southern Airlines [NYSE:ZNH] jumped 4.7 percent yesterday to end the day at USD27.85, while China Eastern Airlines [NYSE:CEA] gained 1.9 percent to close at USD17.56.

Chinese regulators optimized epidemic control and prevention measures earlier this month to support the recovery of the civil aviation sector. The ‘circuit breaker’ mechanism of suspending flights following the detection of cases on board an incoming flight has been done away with, Covid-19 testing requirements have been simplified and the quarantine period for inbound passengers shortened, according to 20 new rules released on Nov. 11.

These relaxed measures help to solve some of the problems that have troubled air travel for a long time but in order for them to have an effect, people need time to adapt, Tang Chao, an aviation industry professional, told Yicai Global.

Flights are still far from their peak. There were 3,008 passenger flights on Nov. 28, the lowest number in a day in the second half so far, according to Chinese flight tracker app Flight Master. The number is down 34.4 percent from a week ago, 65.2 percent from a year earlier and 78.7 percent from the same day in 2019.

China’s air passenger volume should pick up markedly during the public holiday in April next year when people will be more used to the new rules, Tang said. It will be easier for people taking business and personal trips to adjust. And the economically developed eastern and southwestern areas of the country should recover quickly, he added.

Now that the circuit breaker mechanism has been cancelled, the number of international flights is expected to increase, said Li Yangmin, general manager at China Eastern Airlines. The streamlining of Covid-19 test requirements to board China-bound flights and the shortening of the quarantine period will encourage more people to fly. And the relaxation of Covid-19 requirements for staff members in high-risk positions has also eased pressure on airlines.

Between this quarter and next year, there will be an improvement in China’s civil aviation market, said Huang Bin, board secretary at Beijing-based Air China. Stimulated by increased transport capacity and favorable policies, demand for international flights may recover slightly between this quarter and early 2023, he added.

The civil aviation market will improve next year as passenger volumes return to or even top 2019 levels as so many travel plans were put on hold for a long time, Hainan Airlines said. There is likely to be a jump in the number of people returning to China during the upcoming Christmas, New Year and Chinese New Year holidays, it added.

Editors: Liao Shumin, Kim Taylor

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Keywords:   Airlines