China’s three largest carriers are expected to make strides during an international travel recovery this year despite slow progress in 2023, according to a HSBC Global Research report. 

The report, issued 17 January, also reiterates earlier forecasts of “record profits” for 2024, helped a recovery in international networks, along with the easing of economic challenges. 

China Southern China Eastern

Source: Creative Commons

In its report, HSBC believes an international travel recovery will be the “key theme” this year for the ‘Big Three’, which comprise Air China, China Eastern Airlines and China Southern Airlines. 

“We expect the recovery in international capacity to accelerate in 2024, propelled by the easing of external bottlenecks such as visa policies and air rights negotiations,” the report states. 

It cites policies such as Malaysia’s introduction of visa-free travel for Chinese nationals, as well as Thailand’s move to permanently waive visas from March. 

HSBC adds that the ‘Big Three’ should be able to ramp up international flying “quickly”, given that  “they have had almost no layoffs” through the pandemic. 

“This ramp-up should dilute unit cost, tighten capacity and airfares on domestic routes, and boost earnings for the ‘Big Three’,” it adds. 

HSBC also believes the ‘Big Three’ will see “a year of record profits” - doubling down on its earlier reports that also discloses the same outlook. 

“We…think 2024 may be a year of record profits, driven by fading oil and [Chinese Yuan] depreciation headwinds, and the restoration of international routes, which will ease overcapacity in the domestic market,” the report states. 

HSBC forecasts international capacity for this year to be around 99% that of 2019 levels, a significant uptick from 44% reported in 2023. 

HSBC’s comments follows the release of traffic results for 2023, in which the three carriers saw a tepid international recovery. In terms of RPKs, the ‘Big Three’ were still around half the levels seen in pre-pandemic 2019.