China - Australia, The Skies Just Keep on Opening

It’s quite rare for two countries to completely liberalise their air service agreement and then one of those countries to have no immediate interest in expanding services. But Australia did and has been rewarded handsomely.

The formal announcement of an “open aviation market” between China and Australia in December 2016 formalised a period of growth that saw the number of frequencies increase by over 45% from 2013 to 2016, and capacity grow by an even stronger 50%. In 2017, nine new city pairs have been launched between the two countries as the chart above highlights.

We frequently hear about the ’perfect storm’ of events conspiring against a situation but in this case, it’s the complete opposite - a ’perfect summer’. Three key factors appear to have been all working in perfect harmony; the expansion of international services from Chinese carriers, the increased connectivity of secondary Chinese cities and the continued weakness of the Australian dollar.

As the table below highlights, Australia is the fourth-fastest international growth market for Chinese airlines this year and has consistently been among the top five markets for the last five years. In 2013, four Chinese-based carriers operated to Australia. This year that has doubled to eight scheduled airlines with carriers such as Xiamen Airlines and Hainan Airlines building their presence.

During the last five years, the number of originating markets from China has more than doubled from the original six cities as markets such as Chengdu, Xian and Wuhan have been added. There has also been a notable focus on Eastern coastal destinations in Australia. Indeed, Perth on the West Coast has seen no new service despite the rapid increases in activity. Furthermore, on many of these new market pairs, the traffic has predominantly originated from China reflecting the increasing levels of tourism-related travel from China to Australia.

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