A new analysis from route expert OAG suggests China's infrastructure problems are affecting growth rates and warns and that this could be the first step in an unexpected slowdown in Chinese capacity growth.
According to OAG, scheduled one-way capacity from China is now just under 700 million seats, up 60 per cent in the last five years.
This includes more than 599 million one-way seats on the nation’s vast domestic network and 86.2 million on international services.
Domestic growth in 2017 ran at a healthy 9.3 per cent, down from 10.2 per cent the previous year, but the international growth rate took a significant tumble from 13. 3 per cent in 2016 to 4.9 per cent last year.
At fault, says OAG, are problems at China’s four big airports: Beijing Capital, Guangzhou, Shanghai Hongqiao and Shanghai Pudong.
“Headline analysis would suggest that China will continue to grow at rates consistent with the anticipated aircraft demand, but there are signs of an impending infrastructure issue that may impact that optimism,’’ the report says.
“Deeper analysis of capacity growth at the four largest airports in China … highlights that capacity has not grown rapidly in either Beijing or Shanghai in the last year whilst the number of scheduled departures from the four airports has only grown by 1.2 per cent year on year.’’
The report attributes the significant slowdown in capacity growth at the four airports to the long-standing problem of military airspace and says on-time performance (OTP) data for the past 12 months suggests the issue is far from being resolved.
OTP levels fell to below 40 per cent in June although OAG says a better performance by international services suggests “a conscious decision to preserve those longer and more prestigious services at the expense of local requirements”.
“Reduced access to air space and its subsequent impact on OTP can clearly be seen and poses the key question of whether the current infrastructure can accommodate future planned capacity growth,’’ it says. “Locally-based airlines are already having to rethink their development plans with instructions from authorities that new services can only be launched if existing services are dropped.
“The capacity pot is effectively full at the major airports in China.”
The situation is better at secondary markets such as picture is better at Hangzhou, Chengdu, Jinan and Chongqing but the report notes Beijing's new airport at Daxing will “in theory” alleviate the problems there.
“However, unless dramatic increases and consistent access to air space can be guaranteed, it may be that the slowdown in capacity that has occurred is the first step in a wider slowdown in capacity growth in China that no one expected,’’ it adds.
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