REPORT: China to subsidise airlines

China’s finance ministry said on 26 May that it would offer subsidies to Chinese airlines from 21 May to 20 July to help its national carriers weather the coronavirus-induced downturn and higher oil prices. Cash support will only be provided when the average daily numbers of domestic flights per week are lower or equal to 4,500 flights and when the average load factors are lower than 75 percent, the ministry said on its website. The maximum grant would be 24,000 yuan (US$3,574) per hour to the loss-making flights, the ministry added. Analysts expect another year in the red for Chinese airlines in 2022, on top of heavy losses for the past two years, as Beijing sticks with its zero-COVID policy to stop the spread of the virus, according to a report from Reuters and other media outlets. Domestic air traffic has plunged because of lockdowns in Shanghai and surrounding cities. Shanghai-based China Eastern said passenger numbers collapsed 90.7 percent in April year on year, while Shanghai International Airport saw passenger numbers down 98.9 percent in the same period. Last year, China’s aviation industry reported a net loss of 84.25 billion yuan last year, compared with a 102.96 billion yuan in the red for 2020. Airlines alone suffered a combined loss of 67.09 billion yuan in 2021. The move is to stabilise the income of frontline air employees, boost confidence for industry growth, and alleviate the operating burdens of Chinese airlines, especially small and medium-sized carriers, the CAAC said. The funds to be used for the plan will be shared by the central government and provincial finances, with the central government financing 65 percent, 70 percent and 80 percent of the eastern, central and western provinces, respectively, with the remainder being financed by local authorities. For Editorial Inquiries Contact: Editor Matt Driskill at [email protected] For Advertising Inquiries Contact: Head of Sales Kay Rolland at [email protected]