Chinese low-cost carrier Spring soars amid COVID downturn

Chinese budget carrier Spring Airlines is leveraging its low-cost position to attract customers with cheap fares as the country’s domestic aviation market recovers, pursuing an aggressive expansion strategy that could soon turn profitable. Domestic capacity at Shanghai-based Spring rose over 50% in September compared with a year earlier, while passenger traffic was up 47% and the airline’s load factor, or percentage of seats filled, neared 90% as it redirected planes from closed international markets. Spring’s market share has doubled from 2% a year ago to 4%, according to broker Jefferies. The private airline’s success in the Chinese market, traditionally dominated by full-service state-owned carriers, could herald a wider global trend. Investors expect low-cost, domestic-focused carriers will be the first to recover from the pandemic as leisure travellers focus on value and corporate travel takes longer to recover. “We do see low-cost carriers (LCCs) rebounding the fastest out of all airlines across most regions, not just China,” BOCOM International analyst Luya You said. “The reasons are that LCCs can offer lower prices due to lower costs as well as fill their planes more efficiently than full-service carriers.” During the COVID-related downturn, Chinese budget operators like Spring and Air China subsidiary Shenzhen Airlines have been expanding relative to rivals. Spring’s shares have rebounded to pre-COVID levels, compared with declines of up to 25% at the state-owned big three airlines, as investors bet on China’s only listed budget carrier.<br/>