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Two US airlines cut China routes as state-backed rivals turn up pressure

AA, Shanghai, Airlines
Increasingly tough competition from aggressively expanding, state-backed Chinese rivals was stated as the reason

Both American Airlines and Hawaiian Airlines cut routes to China from their schedules.

American Airlines, the largest US carrier by passengers, said it would drop a route between Chicago and Shanghai– canceling the second direct flight from the U.S. city to China in four months. It had previously canceled a flight to Beijing in May. It still however, operates daily flights to the capital from Los Angeles and Dallas-Fort Worth, Texas.

Vasu Raja, vice president of network and schedule planning added: “The two China routes … have been colossal loss makers for us,” stating that high fuel costs had also made the route unsustainable.

Hawaiian Airlines stated that it would suspend its thrice- weekly nonstop service between Honolulu and Beijing, which opened in 2014—from October. It cited slower-than-expected growth in demand as the reason.

Competition from Chinese airlines is expected to grow with the anticipated easing of China’s near-decade-old “one route, one airline” policy, which would allow more local airlines to fly long-haul international routes.

Mike Boyd, president of aviation forecaster Boyd Group stated: “US airlines are at a severe disadvantage.”

“The majority of demand is China-generated, and that gives Chinese carriers the advantage.” He added.

Chinese passengers arriving at U.S. airports are expected to nearly triple to 12.8 mn in 2024 from 4.3 mn this year, The profile is shifting from groups to independent travelers, according to Boyd Group.

Scott Kirby, president of United Airline stated that Shanghai and Beijing has rebounded for the airline after several years of weakness, despite revenue per available seat mile (RASM) being below levels of two or three years prior.

“We’ve had several years of weakness as there was an awful lot of capacity growth out of Beijing and Shanghai.” He stated.

Both American and Hawaiian airlines however stated that the demands placed by China’s civil aviation regulator on foreign airlines to amend the way they referred to Hong Kong, Macau and Taiwan on their websites, did not play any part in the route cancellations.

Hawaiian’s chief executive, Peter Ingram, stated: “That issue of how Taiwan was displayed on our website had absolutely zero impact on this decision. Our economic evaluation was well underway long before that issue arose.”

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