US-China Air Travel Challenges Intensify

1. Summary

• In 2024, air travel between the United States and China is grappling with significant challenges stemming from geopolitical factors and varying market dynamics post-COVID. U.S. airlines, such as Delta Air Lines, American Airlines, and United Airlines, are operating at reduced capacities due to the closure of Russian airspace, which has escalated operational costs and diminished competitiveness. Meanwhile, travel demand fluctuates with less interest from American travelers. Chinese airlines have capitalized on these struggles, expanding operations and capturing a greater market share by maximizing their permitted flight frequencies. Current data indicates that U.S. airlines are restricted to 35 weekly flights while Chinese carriers operate closer to their allowed 50, signaling a shift in strategic advantage. This report examines these dynamics, particularly the implications of ongoing regulatory constraints, operational hurdles, and the strategies adopted by both U.S. and Chinese airlines to navigate the international travel landscape.

2. Overview of US-Based Airlines Operating to China

• 2-1. Delta Air Lines: Current Operations and Limitations

• Delta Air Lines operates a limited number of flights to China, currently part of a group of three US carriers managing only 35 flights a week to China. This is despite having permissions for increased frequencies, highlighting challenges in increasing operational capacities due to geopolitical factors and fluctuating travel demand.

• 2-2. American Airlines: Challenges in Flight Operations

• American Airlines also faces operational challenges, operating a cautious schedule that totals 35 flights a week among the US carriers. This limitation mirrors the broader geopolitical factors affecting the airline's capacity to restore full services post-pandemic.

• 2-3. United Airlines: Capacity Reallocation Strategies

• United Airlines is similarly constrained, contributing to the total of 35 weekly flights to China. Factors such as the closure of Russian airspace directly impact United's competitiveness and operational strategies in maintaining flight operations in the challenging market.

3. Challenges in US-China Air Travel

• 3-1. Political Tensions Impacting Flight Frequencies

• Political tensions significantly impact flight frequencies between the United States and China. As of March 2024, the US government raised the weekly flight limit for Chinese airlines from 35 to 50. However, this number remains substantially lower than the pre-pandemic allowance of 150 flights. Despite the increased limit for Chinese carriers, US airlines are only operating 35 return flights per week, reflecting their constrained operational capacity.

• 3-2. Operational Challenges Due to Russian Airspace Closure

• US airlines face considerable operational challenges stemming from the closure of Russian airspace. This closure affects flight routing and increases operational costs, which diminishes their competitiveness compared to Chinese airlines that can utilize this airspace to lower their expenses. The restrictions imposed on US airlines exacerbate their difficulties in maintaining efficient flight operations.

• 3-3. Fluctuating Demand for Air Travel

• The demand for air travel between the US and China has currently diminished. This reduction is attributed to various factors, including ongoing geopolitical tensions and a decrease in American travelers heading to China. Current reports indicate that the total number of flights operating between the two countries is approximately a quarter of what it was before the pandemic, pointing to significant demand challenges in transpacific air travel.

4. Chinese Airlines' Expansion Strategy

• 4-1. Increased Flight Frequencies to the US

• Chinese airlines have significantly increased their flight frequencies to the United States since the lifting of COVID-19 restrictions. According to various sources, Air China added two more flights from Beijing to New York and one from Beijing to Los Angeles in March 2024. Other Chinese airlines have also expanded their operations to the US, maximizing their allowed quota of 50 flights per week. In comparison, US airlines, including Delta, American Airlines, and United Airlines, have been operating only 35 flights to China, which highlights the challenges they face in enhancing their flight capacities.

• 4-2. Advantages in Airspace Utilization

• Chinese airlines have been effectively leveraging their advantages in airspace utilization, particularly given the current closure of Russian airspace. The US Department of Transportation (DOT) has granted additional flight frequencies to certain Chinese airlines on the condition that they avoid Russian airspace. For instance, Air China received approval to operate additional weekly flights from Beijing to New York while adjusting their flight path to circumvent Russia by crossing the Pacific Ocean and flying over Canada. This approach has allowed the Chinese airlines to optimize their flight routes and enhance operational efficiencies compared to US carriers, which are facing significant operational constraints.

• 4-3. Competitive Edge Over US Airlines

• The competitive landscape between Chinese and US airlines has notably shifted, with Chinese airlines gaining a substantial edge in market share. US airlines, including Delta, American Airlines, and United Airlines, are currently operating within severe flight limitations and display a cautious approach to reinstating flight frequencies, only managing to operate 35 return flights weekly out of a potential 50. This operational restraint, largely due to political and logistical challenges, contrasts sharply with the aggressive expansion strategies adopted by Chinese airlines, which are now running 49 flights weekly. As a result, US airlines risk losing market competitiveness due to their inability to match the expansive growth exhibited by their Chinese counterparts.

5. Comparative Analysis of Pre and Post-Pandemic Travel

• 5-1. Flight Frequency Comparison: US vs. China

• The number of flights between the US and China has significantly declined since the onset of the COVID-19 pandemic. According to Cirium data, flight frequencies are currently at about 20% of the levels recorded in 2019. US airlines are only operating 35 return flights weekly out of the 50 that they are permitted, indicating a cautious approach towards reinstating flight frequencies. In contrast, Chinese airlines have expanded their operations and are now running 49 flights weekly. This disparity highlights the different strategies adopted by US and Chinese airlines in response to the challenging travel environment.

• 5-2. Impact on International Market Share

• The recovery of China's international traffic has lagged behind that of other countries as of the beginning of 2023, influenced by a sluggish economy and a focus on enhancing domestic travel. In July 2023, data showed that flights out of China were still down by 23% compared to the same month in 2019. US airlines have expressed concerns about their competitive edge against Chinese carriers, which have rapidly seized market share despite various restrictions. This apprehension is attributed to factors such as the closure of Russian airspace and perceived anti-competitive policies by the Chinese government.

• 5-3. Regulatory Constraints Affecting Recovery

• Political tensions significantly impact the limited flights between the US and China, as the US government raised the weekly flight limit for Chinese airlines from 35 to 50 as of March 2024, although this is still far lower than the pre-pandemic allowance of 150 flights. Despite this increased limit, US airlines are operating only 35 return flights per week, leading to constrained operations. Additionally, the closure of Russian airspace poses operational challenges for US airlines, affecting their competitiveness since they cannot utilize certain routes, thereby increasing their operational costs compared to Chinese airlines that can navigate around these restrictions.

Conclusion

• Key findings in U.S.-China air travel in 2024 highlight the stark contrast in operational strategies and outcomes. Delta Air Lines, American Airlines, and United Airlines are stymied by geopolitical tensions, particularly the Russian airspace closure, which hampers their ability to maximize flight frequencies and maintain competitive edges against Chinese peers. The geopolitical climate has uniquely disadvantaged U.S. carriers as they contend with higher costs and reduced market opportunities. Conversely, Chinese airlines, under less severe constraints, have seized this opportunity to increase their market presence, adjusting flight routes to optimize operational efficiencies. Limitations such as regulatory barriers continue to impact full recovery to pre-pandemic travel levels, demanding robust strategic adaptations from U.S. carriers. To regain momentum and competitive parity, U.S. airlines must rethink transpacific strategies and advocate for regulatory changes that support sustainable market recovery. Considering such variables, stakeholders in U.S. aviation need a forward-looking approach to align operations with changing market demands and geopolitical realities, potentially exploring alternative routes or partnerships to mitigate existing barriers. The path to restoring transpacific connectivity remains intricate, necessitating innovative solutions and effective regulatory dialogues.

Glossary

• Delta Air Lines [Company]: A major US airline that resumed flights to China post-COVID but operates below permitted capacity due to geopolitical and demand factors.

• American Airlines [Company]: A prominent US airline involved in limited operations to China, reflecting the broader market's cautious adjustment to post-pandemic travel demand.

• United Airlines [Company]: One of the three US airlines flying to China, reallocating capacity to other Asia-Pacific regions due to less demand for China flights.

• Russian Airspace Closure [Issue]: A significant factor restraining US airline operations to China, leading to increased operational costs and strategic disadvantages compared to Chinese airlines.

• Cirium [Aviation Analytics Company]: Provides data analysis on aviation activities, including insights into flight operations between the US and China.

Source Documents

• Current Trends and Challenges in US-China Air Travel Post-COVIDgo-public-report-en-d286884f-da05-4134-88bc-539b8fada68a-0-0