Chinese airline competition lowering Lufthansa's Asia profits, executive says
Competition from Chinese airlines that do not have to avoid Russian airspace is undermining the profitability of Lufthansa's Asian business, despite demand between Europe and China being quite strong, a senior executive said. "It's really overcapacity in Europe from Chinese carriers," Lufthansa's Vice President Asia Pacific, Felipe Bonifatti, said in an interview this week. Lufthansa singled out Asia a number of times last year, including in a profit warning, as the region where yields, a proxy for airfares, were falling sharpest. Chinese airlines have since the pandemic and the outbreak of war in Ukraine in 2022 taken a rising proportion of China's international air traffic, with foreign rivals deterred from some Asian routes by weaker-than-anticipated Chinese traveller demand and higher crew and fuel costs due to the need to avoid Russian airspace. The trend is particularly pronounced in Europe, where Chinese carriers, which still overfly Russia, last year operated 21% more capacity into Europe and Britain than in 2019, according to Cirium schedule data, while non-Chinese airline capacity fell 54%. "Customers flying from different cities in Southeast Asia via China to Europe - this is one of the targets that the Chinese carriers are looking into, which was not the case before the war," Bonifatti said.
Lufthansa Airlines in October cut its Frankfurt to Beijing service, but kept its Munich-Beijing service and routes from both cities to Shanghai.
Read more...
