For some time, Chinese authorities have restricted a single domestic carrier to long-haul international routes. The policy was meant to discourage competition between Chinese carriers, most of which are state-owned, on routes with thin margins. However, the Civil Aviation Administration of China (CAAC) will reportedly ease the rule this year. CAAC claims that this move is in response to changes in the aviation market and the opening of the new Beijing Daxing International Airport.

CAAC cites the new Beijing Daxing International Airport and the changing landscape of the outbound Chinese travel market as the reasons behind the policy shift

The revised policy, which will go into effect in October, separates long-haul routes (routes of more than 2800 miles) into two categories. Routes to destinations with an open-skies agreement or a partial open skies agreement, which includes Britain and the United States, will be unrestricted. This move will give these destinations the ability to garner a larger number of connections via Chinese airlines, including increasingly key direct flights. Routes to countries without such agreements will still face restrictions.

The irony in this development, at least in regards to the United States, is that there may currently be an overcapacity problem with long-haul routes from China. American Airlines recently scrapped its Beijing-Chicago route, citing competitive difficulties.  Even if they’re now allowed, new long-haul routes to certain destination may simply not be profitable in the short-term. Of course this is likely not the case across the board, with Chinese arrivals on the rise in most major global destinations. On the other hand, the United States has a had stagnant past year in terms of growth of Chinese arrivals, which will limit the expansion of routes in the near future.

In the long-term, the easing of route restrictions will ideally make long-haul travel more affordable for Chinese travelers

Nonetheless, it will give Chinese airlines more flexibility in accommodating the ever-growing number of outbound Chinese tourists. For at least some markets, Chinese airlines will have less to worry about when establishing new routes, especially significant in regards to up-and-coming tourist destinations and newly important Chinese source markets and travel hubs. Moreover, the policy change will hopefully have the effect of making long-haul travel out of China more affordable and attainable for a market increasingly interested in globe trotting.

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Transportation