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China’s New Route Policy - Time to Double Up

For many years China has operated a “one route-one airline” policy towards its long-haul international air services. While it may have frustrated some market opportunities but has also led to a plethora of new secondary routes which has been the characteristic of China’s international route expansion of recent years. However, with the opening of Beijing Daxing International Airport next year the rules are changing and double designation, at least for some route, is comin

With our partners IAR, we can exclusively reveal the criteria for double route designation; we say exclusively because we’ve not seen it published anywhere else outside China and that’s good enough for us!

The criteria are pretty simple, the interpretation slightly more complex. So here goes….

If the frequency share of Chinese airlines on the route is less than 70% and the combined weekly frequency for both Chinese and foreign airlines is above fourteen flights a week then double designation is possible. So, taking Paris as an example there are currently 21 flights a week shared between Air China and Air France and the Chinese airline share is 51.9% so that “triggers” double designation. This is just as well given it’s already baked in to the China Southern schedules for next year!

Secondly, double designation can be awarded where a Chinese airline has been the only operator for the last six yearsGiven that many international routes are still in their infancy and have been operated for less than 6 years this may provide further opportunity for new services in around two to three years’ time which may just coincide with a whole load of new aircraft orders arriving!

So, in principle, this new policy is not about selecting airports which will be permitted double designation, but putting in place a policy which could apply to any Chinese airport – first or second or even third tier – as long as they meet the criteria. Of course, in the short term, this means only a handful of routes from Beijing and Shanghai will qualify and new operations will still be dependent on finding slots available at the other end of the route.

Ultimately all of this reflects the growing confidence of both the Chinese market and its future potential for further growth although the policy remains quiet on the need for additional capacity to accommodate some of the opportunities.

Perhaps more importantly, we think it’s an “exclusive” and once again highlights the insights and market analysis we can bring to your table! Time for dinner then…..?

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-John Grant