United Airlines has relaunched its nonstop service from Los Angeles to Shanghai, becoming the only U.S. carrier to offer this route. The decision to restore this route came after Delta Air Lines discontinued its service due to lack of demand and capacity restrictions. United also operates flights to Beijing and Shanghai from its San Francisco hub. As many Western carriers have been scaling back their China service, United’s move to relaunch this route may signal confidence in the market despite challenges such as limited access imposed by the Chinese government.
Virgin Atlantic recently axed its London to Shanghai flights, citing complexities and challenges related to longer flight times caused by the closure of Russian airspace to U.S. and European airlines. British Airways also announced a halt in flights to Beijing until October 25, while Lufthansa lowered its outlook for 2024 partly due to weaknesses in the Chinese market. Australian carrier Qantas also pulled out of Shanghai due to soft demand and failed partnerships with Chinese carriers. Despite these challenges, United’s decision to relaunch its Los Angeles to Shanghai route indicates a willingness to compete in the Chinese market.
In the U.S., airlines have been lobbying the federal government to pause the expansion of international flights to China, citing anti-competitive policies of the Chinese government. Before the pandemic, airlines could operate up to 150 daily flights between the U.S. and China. However, both countries imposed limits on flights as geopolitical tensions rose. U.S. carriers have struggled to compete with Chinese airlines on routes to China due to restrictions on Russian airspace. This has led to a slow rebound in U.S.-China flights, with United describing the current environment as the “new normal.”
While non-Chinese carriers have seen a 42% decrease in international seat capacity compared to 2019, Chinese carriers have only experienced a 9% decrease. Chinese airlines have been able to restore their international networks close to 2019 levels, particularly expanding operations in Europe since summer 2023. The number of scheduled flights to Europe increased by 74%, surpassing summer 2019 capacity. This indicates that Chinese carriers have been able to recover more quickly and effectively than their non-Chinese counterparts.
Overall, the airline sector stock index performance year-to-date has shown the impact of various factors on the industry. The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth over a trillion dollars into a single number. This index includes companies publicly traded across global markets, including network carriers, low-cost carriers, and other related companies. Despite challenges in the airline industry, United’s decision to relaunch its Los Angeles to Shanghai route signals a potential opportunity for growth and competition in the Chinese market.
