State-owned firm sets tone for other airlines to survive and thrive amid the pandemic

China Eastern Airlines, a Shanghai-based State-owned carrier, said it aims to help strengthen domestic circulation in civil aviation and boost a dual-circulation development pattern in the industry.

In line with the larger national strategy, the domestic aviation market will serve as the mainstay, and the domestic and international markets will promote each other.

The airline said with international flights operating at low capacity due to COVID-19-related travel restrictions, Chinese carriers should increase their capacities in the domestic market in the near term.

The airline's refreshed strategy is in response to the nation's newly proposed dual-circulation development pattern. The strategy says China will mainly rely on "internal circulation" or the domestic cycle of production, distribution, and consumption for its long-term development, and place equal emphasis on both the domestic and external markets as engines of economic growth.

"Better domestic circulation of flights serves as the foundation of both the dual circulation pattern and the growth of China's civil aviation market," said Shao Fengru, deputy director of the deepening reform office at China Eastern Airlines.

"China has a great potential to expand domestic demand in city clusters and metropolitan areas, as a growing number of middle-income consumers will further stimulate demand by taking more flights. Besides, the urbanization rate is still low and development in different areas is uneven, and there exists untapped demand," she said.

As the contagion increasingly comes under better control in China, the country has been leading the global recovery in the air travel market, with the number of scheduled flights in the domestic market till mid-November reaching about 80 percent of the level recorded last year, according to the Civil Aviation Administration of China.

Globally, Asia is still in recovery mode. Europe and North America, where confirmed infection cases are still rising, have been struggling with new travel restrictions. Overall, the overseas air travel market has recovered to only 40 percent to 50 percent of the pre-pandemic level, according to the International Air Transport Association.

With a sharp decline in the demand of international air travel market, the domestic market has excess capacity and oversupply of aircraft, especially wide-body planes that used to serve long-haul international flights. Domestic carriers should seek new demand to boost growth, industry experts observed.

On June 18, China Eastern became the first domestic carrier to launch its weekend-unlimited flight pass in China. Passengers with the pass, which costs 3,322 yuan (US$506), can take flights to a Chinese mainland city with no limited times on weekends before the end of this year. More than 100,000 such passes were sold.

"The move has helped drive domestic economic circulation significantly. The deepening reform and innovative measures of State-owned enterprises have helped smooth circulation and stabilize growth," Shao said.

To build China into an aviation powerhouse, major domestic commercial airlines and cargo companies should further increase their competitiveness, innovation and ability to minimize risk, China Eastern said.

Subsequently, several Chinese carriers, including China Southern Airlines, Hainan Airlines, Shandong Airlines, Xiamen Airlines and Spring Airlines, introduced various unlimited flight passes on domestic routes, and saw brisk sales of their travel products.

For instance, Shandong Airlines has attracted more than 100,000 new customers to its unlimited passes. Without flights, airlines would be unable to generate any marginal revenues, and certain grounding and maintenance costs would make the financial situation acute, the carrier said.

Qi Qi, an associate professor at Guangzhou Civil Aviation College, said domestic carriers should actively respond to the country's dual-circulation strategy to achieve further growth and steer clear of risks.

"Domestic carriers should speed up the formation of a new development pattern in the air travel market, where the domestic major cycle serves as the main body, and airlines should further revitalize resources of small and medium-sized airports," Qi said.

"For the Guangdong-Hong Kong-Macao Greater Bay Area, it is one of the areas that has the biggest advantages to achieve better domestic circulation, as the area boasts certain advantages to introduce more innovative and digitalized products, launch more flights, and establish world-class civil aviation infrastructure," he said.