Why China actually only has one major airline

The Chinese aviation industry has been the fastest-growing in the world over the last couple of years. As the industry starts to recover from the coronavirus crisis, China has shown a faster recovery than any other country when it comes to air travel. The reason why Chinese companies are recovering quite quickly is simple; China still only has one major airline: the government.

In 1949, the year Mao Zedong became Chairman of the Communist Party of China, the Chinese Airline CAAC started to operate domestic flights. The CAAC was not founded as an airline, it was and still is the Civil Aviation Authority of China, which in 1949 was tasked with operating flights within the country.

CAAC Airlines had a monopoly as the Chinese passenger airline. In 1962, CAAC expanded beyond China, flying to the Soviet Union, Mongolia, North Korea, Laos, Burma, Bangladesh, North Vietnam, and Cambodia. In the 1970s, the airline started to expand to the United States, Europe, the Middle East, and Australia using Airbus and Boeing aircraft.

In 1988, CAAC Airlines was split up into Air China, China Southwest Airlines (which merged into Air China), China Eastern Airlines, China Northwest Airlines (which merged into China Eastern Airlines), China Southern Airlines, and China Northern Airlines (which merged into China Southern Airlines). After all the mergers, only Air China, China Eastern, and China Southern were left.

The ‘big three’

The Chinese ‘big three’ rapidly modernised the Chinese aviation industry by purchasing new aircraft and retiring the older, soviet-built planes. China became more open to travelers and tourism allowing the airlines to expand even further.

Over the last couple of decades, airfares have become lower and the Chinese population has become richer, allowing for a surge in passenger numbers. This also allowed new airlines to start flying in the country; or so it seems. Almost all Chinese airlines are either directly state-owned or owned by one of the ‘big three’ airlines, which are also still state-owned airlines.

Although there seems to be a large number of airlines in China, almost every single one can be traced back to the national aviation authority CAAC. This also explains the way Chinese airlines are battling low passenger numbers due to the coronavirus outbreak.

Many Chinese carriers are offering passengers flights at incredibly low rates or unlimited flight passes. These deals are supposed to get as many people flying again so that the Chinese population regains confidence in air travel. It is widely assumed that Chinese airlines could not run these schemes without serious government support.

It is unknown exactly how much influence the Chinese government still has in its airlines. Decisions such as aircraft purchases have proven to be heavily politically influenced, prompting Airbus to open a production facility in the Chinese city of Tianjin, but are also kept quiet. What we do know is that the Chinese aviation industry is changing very rapidly and the politics of Chinese aviation make it one of the most interesting industries in the world.