Since May 21, Chinese passenger flights operated by Chinese airlines will receive cash subsidies from the government if the revenue fails to cover variable costs.
The financial support policy for Chinese flights led by the Civil Aviation Administration of China will be implemented for two months, with an average of 4500 flights per day.
Today, the first financial reporter learned from a number of airlines and platforms that since the implementation of the “guaranteed subsidized flights” policy for three days, the number of flights per day has decreased compared with last Friday, but the ticket price has increased significantly.
why does the ticket price rise
Data from Ctrip platform shows that compared with last week, the increase in ticket prices this week is more obvious. The average price of one-way ticket (excluding tax) from May 14 to May 20 is 603 yuan, while the average price of one-way ticket (excluding tax) from May 21 to May 27 is 763 yuan, an increase of 27% over the previous seven days.
On the microblog, many netizens roast that buying air tickets had become more expensive recently. Some even sent a comparison chart. The same route they found had risen by 500 yuan in recent days.
The reporter learned from a number of Air China companies that such ticket price increases actually began to occur in the second half of last week, which has something to do with the “minimum subsidy” flight policy, which “controls the total amount” of flights to be flown in the next two months.
According to the subsidy policy of the Civil Aviation Administration, in the two months from May 21 to July 20, the average number of scheduled passenger flights that China’s 41 airlines can fly per day is 4500, and the number of flights that each airline can fly is divided based on the share of flight volume from April 6 to May 10.
Compared with the downturn of the aviation market in April, the demand of the aviation market has been recovering since May, and the number of flights is also gradually increasing. If the market continues to improve, the average daily 4500 flights implemented since May 21 is equivalent to “total control”. Some airlines will not be able to increase more flights that were originally to be resumed, and the ticket price will increase under the condition of “supply exceeding demand”, It means that the ticket price level will be higher than that in full “market-oriented competition”.
If the subsequent market turns worse due to sudden factors such as the epidemic, the average 4500 flights per day with a seating rate of less than 75% also have a subsidy policy. For flights whose income cannot cover variable costs, they can continue to fly “at no loss” through financial subsidies, which also has the confidence to raise ticket prices for airlines.
who are the benefits of subsidy policy
So, how many flights has Air China actually flown in the three days since the implementation of the policy?
According to the latest statistics from the flight steward, on the first day of the implementation of the policy on May 21, the number of flights in China was 4136, down 20% from the 20th. In terms of flight distance, flights on routes below 1000km decreased by more than 30%, and flights on routes above 2000km increased by 7.7%; The daily average distance increased by 7.7% month on month (1190km → 1282km).
On May 22, the number of flights in China was 4511, an increase from May 21, but still lower than 5190 before the implementation of the policy on May 20. In terms of flight distance, flights on routes below 1000km decreased by more than 30%, and flights on routes above 2000km increased by 7.7%; The daily average distance increased by 7.7% month on month (1190km → 1282km).
For why there are less than 4500 flights and more than 4500 flights on the same day, the relevant Airlines revealed that the data statistics required by the policy are in weeks, that is, the maximum number of flights that China Airlines can perform in seven days of this week is 4500 7 = 31500.
A number of industry insiders analyzed to reporters that after the implementation of this policy, it will be good for airlines to allocate more share of the number of flights. Among the average 4500 flights per day, China Southern Airlines gained 15.56% of the share, with 700 flights per day, followed by China Eastern Airlines, with 518 flights per day. Air China, Sichuan Airlines, Xiamen Airlines, Shenzhen Airlines, HNA, Huaxia Airlines, Spring Airlines and mountain Airlines ranked among the top 10 allocated shares.
Lin Zhijie, a person in the civil aviation industry, told reporters that the implementation of this policy is mainly to ensure that one-third of the flights in the industry can fly, which has three main functions: first, to ensure economic exchanges, to ensure that Chinese flights are continuously connected, and some passengers who need to travel fly; Second, ensure operation safety, which is helpful to maintain the state and skills of the unit and improve the safety margin; Third, stabilize the income of employees and protect the basic income of crew members.
“Although the number of flights per day before the implementation of the policy has been close to 4500, and the recovery effect of the policy on the number of flights is limited, it can help deal with the uncertainty of the follow-up market and play a supporting role,” Lin Zhijie further pointed out that in April, civil aviation ushered in the largest monthly loss in history. The introduction of subsidy policies can subsidize the loss of Chinese flights. Moreover, the policy treats state-owned enterprises and private enterprises equally and can ensure the cash flow of each flight, Can help private airlines survive.
