By LI Hao

Recession besets the global civil air industry and Chinese airlines have suffered another year of losses in 2022.

Performance forecasts for 2022 by China Southern Airlines, China Eastern Airlines, and Air China, all report losses ranging from 33 billion yuan (US$4.5 billion) to 39 billion yuan, citing the pandemic, exchange rates, and fuel costs. Smaller airlines, such as Juneyao Airlines, Spring Airlines, and China Express Airlines are also losing big.

The effect of the pandemic on the civil air industry in 2022 was worse than expected. Airlines recorded historic lows in terms of daily flight departures and daily flying hours. Compounding the bleak situation are unfavorable foreign exchange rates and oil prices.

Fuel accounts for 25 percent of the costs of China’s airlines. Airline debts and assets denominated in foreign currencies incurred huge losses, worsened by overseas purchases of aircraft, materials, and fuel along with airport fees.

Airlines are also hedging against fuel costs and currency conversion. China Eastern Airlines announced in December that it would add at most US$3 billion to its US-dollar hedging accounts and 11 million barrels to its aviation-oil hedging accounts.

It was also a bad year for airports. Some of the largest airports in China, such as Shenzhen, Shanghai, and Guangzhou are expected to lose billions, with the worst results in Shanghai, where losses are set to hit 3 billion yuan.

China’s airliners transported 9 million passengers during the Spring Festival holiday, up by almost 80 percent compared to last year. Flights increased by more than 33 percent to just below 84,000 with an average load of 76 percent.