MIDAS Aviation Blog 

Only 10% Growth in 2018…Is China Slowing Down….

It used to be said if the United States sneezed, the world caught a cold. That certainly applied back in 2008. How times have changed. Today the focus is on China and what would happen if that market even stopped to blow its nose!

Over 10%  scheduled air capacity growth, 10.6% to be precise, is by no means shabby performance for any market – and  especially one that has perhaps shown some signs of a slowdown in 2018 if you believe everything that you read. Such growth continues to place China at the centre of global aviation, and we’ve picked out some key points comparing 2018 versus 2017. It is, after all, good to look backwards before heading forwards on occasion.

The top ten destination markets are not surprisingly dominated by surrounding Asian countries with the United States and Australia also making an appearance 

Thailand saw impressive capacity growth of 25% year on year whilst South Korea recovered some ground back towards previous levels of activity. 

Top 10 Country Markets from China Source: OAG Schedules Analyser

Top 10 Country Markets from China
Source: OAG Schedules Analyser

Japan’s modest 3.3% growth may be slightly alarming with the destination seeking to reach 20 million global visitors in 2020 and with China identified as a key source market.  Clearly some work clearly needs to be done by the Japanese to realise their targets. 

 Australia has clearly benefitted from the open-skies agreement although some paring back of capacity has begun to occur and whilst the United States 5.2% capacity growth remains encouraging, market feedback suggest that demand is sluggish and that yields are under real pressure. 

Those markets with the highest levels of growth that are worthy of mention include Cambodia with some 59.5% growth and a further 790,000 seats year on year, and Indonesia with 46.4% growth and 710,000 additional seats. Other markets such as Spain, Greece and Israel have all seen high levels of growth as well but from smaller bases suggesting that China’s growth is reaching out across the globe.

Perhaps the most interesting analysis is however, how much of the growth is provided by Chinese based airlines and that reveals a very interesting picture. Chinese based airlines launched new services to eight new country markets, five of which are year-round; ranging from Denmark through to Egypt. 

Japan remains the largest single country destination for Chinese Airlines; in total over two-thirds of capacity in this market being produced by local Chinese airlines. That theme of Chinese airlines providing majority capacity share is replicated in markets such as the United States (61%) and Australia (90%) and in the case of the United States will skew further in 2019 as United Airlines scale back its Chinese presence further. 

Top 10 Country Markets for Chinese Domiciled Airlines Source: OAG Schedules Analyser

Top 10 Country Markets for Chinese Domiciled Airlines
Source: OAG Schedules Analyser

The challenge for overseas carriers in developing capacity to China appears to be more of a challenge the further away from the market they are. Carriers from Thailand, Malaysia and Indonesia have all seen double digit growth year on year. Indonesian based airlines added some 620,000 seats compared to only 83,000 from their Chinese counterparts; making it one of the few markets where “inbound” was stronger than “outbound” growth.

In total during 2018 some 9.2 million scheduled seats were added from China to international markets; that’s around 25,200 a day. And whilst the ratio between China domiciled and overseas domiciled capacity growth was 56:44 the further from China the overseas market the greater the share of Chinese domiciled airline growth; in the United Kingdom for instance it was literally 100% all made in China!

So, if China is actually slowing down there is no doubt that there are many airlines still making hay whilst the sun is shining and perhaps if it is a sneeze it’s more a hay fever thing than Asian Flu!

For more details and insights and a look at an infographic on key trends and developments across the world’s most fascinating market here is a link to something we produced earlier…

MIDAS China Info Graphic.jpg
MIDAS Aviation