(Yicai) April 14 -- Chinese airlines have increased their flights to Europe during the peak summer season, given their cost advantage over European peers as the Middle East conflict is driving oil prices up. Meanwhile, they cut routes to Southeast Asia and Oceania.

China Eastern Airlines will raise the frequency of its flights to European destinations by 24 percent this summer-autumn season from a year earlier, with the peak at 410 weekly flights, up 35 percent in the period.

China Southern Airlines launched a new route between Beijing Daxing International Airport and Helsinki and plans to add flights from Guangzhou to London, Madrid, Moscow, and Budapest. Air China intends to open new routes from Beijing Daxing Airport to Frankfurt and Milan.

Flights between Europe and Asia through Middle Eastern transfer hubs have been canceled due to the ongoing war in the Middle East. Chinese carriers, which are allowed to fly over Russia, enjoy shorter flight times and lower costs on direct routes to Europe compared with European airlines, which gives them a great advantage.

However, a marketing executive at a Chinese airline told Yicai that European routes were profitable last month, but if fuel prices surge further, even more expensive ticket prices may not be enough to cover rising costs.

Historical data show that airlines enter a low-margin environment once crude oil exceeds USD80 per barrel, according to Zou Jianjun, a professor at the Civil Aviation Management Institute of China. When prices rise near historic highs, carriers will almost all fall into a loss-making state.

Furthermore, if the Middle East conflict persists, some European airports may face severe jet fuel shortages. Olivier Jankovec, director general of Airports Council International Europe, recently warned that if the Strait of Hormuz does not reopen for stable operations within three weeks, the European Union will face a systemic shortage of aviation fuel.

Cancellation of Flights to SE Asia, Oceania

As Chinese airlines go all out to exploit the supply gap in Europe-Asia flights, they are also cutting some routes between China and Southeast Asia and Oceania to ease cost pressure from rising oil prices.

Hong Kong-based Cathay Pacific recently announced that it will cancel about 2 percent of its passenger flights between mid-May and the end of June to offset part of the pressure from rising jet fuel costs. Most of them are regional short-haul routes and some to and from Australia, South Asia, and South Africa.

Cathay Pacific's subsidiary Hong Kong Express Airways will cut about 6 percent of its flights in the period.

Other airlines have also terminated flights on multiple routes from China to Southeast Asia or Oceania from April 1, including some in May, despite the Labor Day holiday peak travel period for Chinese residents, Yicai learned from data by civil aviation digital technology firm VariFlight.

Carriers cancel flights on a route if the expected revenue cannot cover rising costs from oil price fluctuations over an extended period, marketing executives at several airlines explained to Yicai.

For example, as Australia is about to enter a low travel season, jet fuel costs there are much higher than in the Chinese mainland, and fierce competition makes it difficult to raise ticket prices, so flights to Australia have become among the first to be cut by Chinese carriers.

A Spring Airlines executive said yesterday that long-haul international routes face greater pressure because jet fuel prices are higher overseas. Meanwhile, short-haul ones allow airlines to load enough fuel in the Chinese mainland for round-trip flights.

Even though airlines worldwide have raised ticket prices and fuel surcharges to hedge against higher fuel costs, such measures are still insufficient to fully offset the additional cost pressure, the executives noted.

Editors: Tang Shihua, Futura Costaglione