China Might Finally Abolish Their “One Route, One Chinese Airline” Policy

The Chinese aviation industry is growing at a rapid pace, and we’ve seen so many new routes added lately. By 2024 China is expected to overtake the US as the world’s largest passenger market, and by 2035 they expect to transport 1.3 billion passengers per year.

While a lot of airlines in China are government owned, they operate a bit differently than elsewhere in the world. While many countries have just one government owned airline, China has many government owned airlines that essentially compete with one another. Well, sort of. On one hand China makes these airlines compete, while on the other hand they put policies in place that set airlines up for failure.


Hainan 787-9

I’m referring to China’s “one route, one Chinese carrier” policy. Under this rule, only one Chinese airline can operate each longhaul route. There are a few markets where there are exceptions, but in 95% of longhaul markets that policy exists.


Air China 747-8

On one hand I see the logic, in that they don’t want airlines competing too heavily against one another. The problem is that it’s causing airlines to operate routes that are tough to turn a profit on, and also causing airlines to preemptively launch routes to prevent their competitors from operating them lately. The policy simply doesn’t make sense to me, especially as multiple foreign airlines are allowed to compete in many of these markets.

Just to give an example, if you want to fly Sichuan Airlines between Shanghai and Los Angeles (two of the biggest cities in their respective countries) you’d have to connect twice.

Similarly, Hainan is based in Beijing, and most of their longhaul routes are out of Beijing. However, Air China already operates many routes out of Beijing, so Hainan isn’t allowed to fly from Beijing to Los Angeles or New York, so instead they fly from Changsha to Los Angeles and Chongqing to New York. Want to get from Shanghai to New York on Hainan? You’ll have to connect twice or have a ~27 hour layover.

The counter argument is that this policy causes airlines to provide longhaul service to secondary cities with a lot of demand, which is true, though it also creates some of the most inefficient route networks you’ll find anywhere in the world.

It looks like China is finally reconsidering their “one route, one Chinese carrier” policy. Per ch-aviation, the Civil Aviation Administration of China has released a draft regulation that would open up some longhaul routes to more Chinese airlines, as a way to increase international competitiveness:

Under the new proposal, routes that are currently limited to one carrier would be opened up to competition by domestic carriers.

As part of the reforms, long-haul routes would be classified into two types, depending on how open the Bilateral Air Services Agreement (BASA) is with the destination country. Open or partly open routes will be unrestricted on the number of carriers, routes and capacity. All other routes will only be partly restricted, with long-haul routes open to more than one carrier.

I wouldn’t count on any changes until the proposal is officially approved, but I certainly support it. It doesn’t make sense that three US airlines can fly nonstop from Los Angeles to Shanghai, while only one Chinese airline can. While there are tons of huge markets in China, there are only a few with decent yields, so a modified aviation policy seems like it would be in everyone’s best interest.

What do you make of China changing their “one route, one Chinese carrier” policy?

Comments

  1. I can’t stand Chinese carriers. At least not the big ones. US carriers are a dream to fly over China Eastern (what I think is the worst airline on the planet due to smoking ). Hopefully this makes them shape up

  2. @Lucky
    Somewhat on topic – I have an upcoming trip to PEK from Chicago that I’ll be booking with ANA miles and my options are:

    ORD – PEK via UA 777 2-4-2 business class

    Or

    ORD – LAX – PEK via Air China 787-9 business class.

    Is it worth going to LAX to take Air China or would you just suck it up on the older UA “Polaris?”

  3. Its the internal competition. Each flag airline was backed by some powerful guy behind the scenes. The proposal means some power has diminished or someone is trying to do so.

    Its china. Think like one.

  4. Judging by current policies it will only make incumbent stronger though- which in most cases is Air China

  5. China has to end this policy. They have a 2nd airport in Beijing coming. The policy has at least accomplished what is was supposed to. It limited competition for Air China and it turned CAN, PVG, SHA, PEK into strong hubs. But the policy has to end. It serves no purpose nowadays.
    No country has such a policy. So there will be more competition.

  6. I’ve thought Hainan Airlines is based in Haikou, Hainan. The capital city of the province of Hainan.
    Visited the city some 30 times past 10 years and met some of the airline staff.

    Also had the flights with several other local airlines. Happy to take these, at least for the short haul flights.

    So is the airline really Beijing based?

  7. @Nick: Always avoid United 2-4-2. Is Air Canada an option. I fly to China frequently from the US and the cheapest J fares are with a connection in Toronto.

  8. Instead of a double connect on Hainan from Shanghai to NYC lasting 27 hours,
    I would like Shanghai to Seattle on Hainan. Then Seattle to NYC on Alaska.
    Or connect in Boston and take AA to NYC.

  9. God….I would take almost any airline over an American carrier….let more Chinese airlines fly the routes to inject more competition.

  10. It is a shame to see these pround chinese syate owned airlines quickly turning into capitalistic bottom feeder airlines like the us3

  11. @Ryan: China Southern is different. A year ago my wife and I flew China Southersn (LAX to CAN, connecting to DAC). It was an A380 with decent legroom and IFE. My wife has asthma which usually flares up on long flights so we carry a nebulizer. She did not have to use it on China Southern and claimed it was the cleanest long haul flight ever (air quality). I still prefer SG and CX, but will continue to use CZ as long as their prices are competitive (actually ~$200 lower per ticket, so $400 savings for us). Only one major drawback: putting up with the occasional delays.

  12. @Kirmo Wilén

    Hainan’s corporate headquarters are in Haikou and Haikou is a central hub for them, but the majority of their longhaul international flights operate from Beijing.

  13. The Chinese government is going to allow competition instead of monopolies? OMG WHAT IS HAPPENING IN THE WORLD!!!

  14. Hainan Airlines (HNA Group) is technically a private company though, different from those state-controlled ones.

  15. It would be oversimplifying the situation of long haul flights flying to no-where in China. It is often a relatively cheap way for local government officials to display their work for appraisal under the Belt and Road initiative and it does bring faces to the officials and jobs to the local airport.
    Even if the one route policy is to be abolished, second tier cities will not be having any fewer long haul routes soon. The handsome subsidy and the need to display the support for Belt and Road is real.

  16. @ Nick In Chicago

    Since you’re booking with ANA miles, why not take ANA flights then? Superior soft and hard products over the 2 choices you’d mentioned. Unless I’m missing something…

  17. Removing one route one airline policy only makes sense for China-USA routes.

    YVR has exploded with access to secondary Chinese cities under this policy. Vancouver is the best city to catch a flight Anywhere in a China.

    My home port of Calgary has YYC-PEK largely because HU can’t get into YVR. Would HU shift flights to YVR-PEK if allowed? My guess would be yes. At a minimum The YYC route is toast as the aircraft could probably be deployed more profitably elsewhere.

    I will go out on limb and say chine- Europe is a lot more like China-Canada than China-USA. It’s better off forcing airlines to serve secondary markets beyond LHR, CDG, FRA, and AMS.

  18. Kris Moen – Why exactly should China’s priority be to give Vancouver access to loads of secondary Chinese cities?

  19. It is important to remember that this policy does not apply to code share flights. For example, both United and Air China fly between PEK and SFO. Air China can sell seats on both it’s flight and the United Flight. According to the rule, another Chinese airline cannot fly within that route, but if another route is taken by another Chinese carrier and they sell seats on a partner’s flight, that is okay. The reason behind this, I think, is to make more Chinese airports and cities on the map.

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