Deal to Double China Flights Signals U.S. Airlines’ Stronger Hand

Date: Thursday, August 24th, 2023
Source: Wall Street Journal

The U.S.’s decision to double the number of direct flights it allows from China casts a rare glimmer of light on an otherwise gloomy relationship. It also underscores how far the two sides must go before their bilateral links return to prepandemic levels.

There are far fewer direct flights between the two countries than four years ago, before Beijing imposed strict border controls to reduce the spread of Covid-19. Other countries—including America’s closest allies—have been quick to restore flights to and from China after Beijing ended the restrictions in January, but U.S. carriers appear to be in no great rush to see Washington do the same.

Delta Air Lines and American Airlines last week joined United Airlines in announcing plans for new flights in the coming months—while urging the Biden administration to stick to its measured and gradual approach to reopening the market.

The U.S. Transportation Department earlier this month said that Chinese carriers can operate 18 direct round-trip passenger flights a week starting Sept. 1, rising to 24 at the end of October and matching a similar measure from Beijing. At the same time, it said it would “continue to assess how and when to further modify its posture” toward flights by Chinese carriers, “in a manner that offers an equitable and competitive operating environment.”

While Beijing has refrained from public criticism of the agreement, China’s state-run media said the country’s carriers had been pressing for more flights to the U.S. The Global Times, a Communist Party mouthpiece, said Washington was using “political excuses” to block the resumption of flights.

The number of U.S.-China flights in July was 97% lower than in the same month of 2019, according to Cirium, an aviation analysis company. That is the reverse of flights between China and the U.K., which were 3% below pre-Covid levels in July; those with Australia were close to 60% of their 2019 level, coinciding with a thaw in ties as the two sides sought to resolve a trade dispute.

The low-key response from China to the flights deal contrasts with increasingly hostile rhetoric from both Beijing and Washington in their mounting spats over issues including Taiwan, unfair competition and human rights.

“It shows both sides are trying to create a more stable and sustainable U.S.-China bilateral relationship,” said Drew Thompson, a visiting scholar at the National University of Singapore, adding that reciprocity has long been the issue clouding flight arrangements between the two countries.

U.S. airlines have bridled at being unable to secure better gates at airports or attractive takeoff and landing times even before Covid. They are also wary that China might impose new border controls in the event of another disease outbreak. Lengthy quarantines and a shortage of suitable hotel rooms during the pandemic made it hard to find crew willing to work on the China routes, forcing U.S. airlines to add an extra stop on flights to China and hire extra crew members willing to be quarantined.

Beijing also imposed penalties on airlines that unwittingly carried passengers infected with Covid into the country—a move that led Washington to suspend all Chinese passenger flights to and from China.

“Demand for the limited flights now makes it highly profitable compared to pre-Covid when there was aggressive competition from Chinese carriers,” said Brendan Sobie, an independent aviation analyst. Doubling the number of flights won’t “change the status quo,” he said. This puts Washington in a stronger position to hold out for a better deal from Beijing.

Globally, the pandemic led to a slump in air travel that forced airlines to mothball fleets and lay off employees to stem losses—something China’s state-backed airlines were under less pressure to do. U.S. carriers benefit from more time to rebuild their capacity, especially as they have given priority to restoring links with other markets, such as Europe, that dropped Covid controls more quickly.

Another source of friction has been routes through Russian airspace, often the shortest and cheapest way to fly between Northern Hemisphere destinations. U.S. carriers stopped entering Russia’s airspace after the invasion of Ukraine, which has increased the costs of some of their China routes.

“Avoiding Russia poses a significant obstacle, particularly for China-U.S. East Coast flights, and is especially problematic in the winter season for the westbound flight due to prevailing winds,” said Charles Donley, an aviation lawyer at Pillsbury Winthrop Shaw Pittman. There are also fewer airports available along non-Russian routes for emergency landings.

After a deal in May to increase round-trip flights between the U.S. and China from eight to 12 a week, all four of the new flights by Chinese carriers avoid Russian airspace, including Air China’s new service to New York, according to Flightradar24, a flight-tracking company. Most of the newly added flights are between the U.S. West Coast and China, as the routes are less affected by the northern routing issue.

That reflects the importance Beijing places on increasing flights and the economic impact of their absence, said Thompson from the National University of Singapore.

There are many other obstacles to restoring flights, he said, including a worsening business environment for foreign companies and the chilling effect of Beijing’s counterespionage campaign in deterring visitors.

In June, the U.S. government warned Americans to reconsider travel to mainland China because of what it called “the arbitrary enforcement of local laws,” including exit bans and the possibility of wrongful detention. In the first six months of 2023, the number of foreigners arriving in Shanghai was more than three-quarters below the same period in 2019, according to government data.

In response, the Ministry of Foreign Affairs in Beijing said China welcomes foreign businesses and personnel, and accused Washington of disrupting practical cooperation between the two countries. The Civil Aviation Administration of China didn’t respond to questions about the recovery of flights between the two countries.

The latest increase in flights came as China further opened up by lifting restrictions on group tours to the U.S., Japan, South Korea and Australia, along with more than 70 other countries.

Flights to or from China accounted for 8% of all international traffic in the Asia-Pacific region in June, measured by revenue passenger-kilometers, an industry gauge of demand, according to the Association of Asia Pacific Airlines. China’s pre-Covid share was around 24%, said Subhas Menon, director general of the industry group.

“China’s international flight recovery is at least 12 months behind other regions,” he said, as Beijing maintained Covid border controls longer than most other countries.

[Read from the original source.]