Just $13 to Fly Across China as Airlines Struggle to Fill Seats

(Bloomberg) -- Chinese airlines are offering tickets at what are known colloquially as cabbage prices as they start restoring seat capacity following drastic capacity cuts enforced by the coronavirus.

A one-way direct trip from Shanghai to Chengdu on Juneyao Airlines Co. this Saturday costs just 90 yuan ($13) plus 50 yuan in taxes. That's a three-and-a-half hour journey, about the same as a flight from New York to New Orleans.

Chinese carriers are adding nearly 3 million seats back into scheduled services this week, primarily for domestic routes, according to OAG Aviation Worldwide. “The dramatic capacity recovery has led to very low fares being made available,” analyst John Grant wrote in a weekly update on the market.

China Southern Airlines Co. is adding 684,000 seats and China Eastern Airlines Corp. is increasing capacity by 566,000 seats, Grant said. China's overall capacity is still only around half the 16.9 million seats available as of Jan. 20, when there were only hundreds of reported infections worldwide, but the recovery this week restores its rank as the second-biggest market in the world after it shrank to smaller than Portugal's.

Online news portal Sina.com said Chinese airlines posted losses of more than 10 billion yuan in February as revenue fell 37 billion yuan, citing industry estimates. Its report late Monday also flagged the availability of tickets at “cabbage prices” as grounded flights get restored.

While the picture turns more positive for China, the neighboring markets of South Korea and Hong Kong are still sharply reducing capacity, both by more than 20% this week, according to OAG. Since Jan. 20, Hong Kong's capacity has slumped 71%, with Cathay Pacific Airways Ltd. shrinking from more than 400,000 seats to 119,860, OAG said.

The International Air Transport Association on Feb. 20 said the virus could result in a 13% drop in passenger demand for airlines in the Asia-Pacific region this year, translating into a revenue loss of $27.8 billion. The bulk of that would be borne by carriers registered in China, with $12.8 billion lost, it said.

--With assistance from Li Liu and Matt Turner.

To contact the reporter on this story: Harry Suhartono in Jakarta at hsuhartono@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Will Davies

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