On Thursday April 11th, the US aviation industry sent a letter to the Biden administration asking for a strategic pause in the approval of new flight services to and from China. Their request is based on concerns about Beijing’s “current harmful anti-competitive policies.”
Airlines for America (A4A), which includes leading carriers such as American Airlines, Delta and United, spearheaded this initiative along with several aviation labor unions. They expressed their concerns to U.S. Secretary of State Antony Blinken and Transportation Secretary Pete Buttigieg.
The letter stressed that the current competitive imbalance could threaten the livelihoods of some 315,000 US aviation workers associated with the China route. They highlight the risks of allowing the Chinese aviation market to expand unchecked, which could lead to US airlines losing ground to their Chinese competitors, affecting U.S. jobs and businesses.
Shares of China’s biggest airlines plunged the day after as investors reacted to the news. Shares of Hong Kong-listed Air China Ltd. fell as much as 4.6%, while those of China Southern Airlines Co. fell 2.2%. Shares of Shanghai-based China Eastern Airlines Corp. fell as much as 3.5%, worse than the 1.9% decline in the Hang Seng index.
Earlier this year, Washington decided to allow Chinese airlines to increase their direct passenger flights to the US. Following this decision, the number of weekly round trips increased from 35 to 50 as of March 31.
The adjustment, which was intended to gradually restore air links disrupted by the Covid-19 pandemic, still represents a reduction from the more than 150 weekly round trips allowed prior to the pandemic-imposed restrictions in early 2020.
China is now simply too large for the rest of the world to absorb this enormous capacity.
Janet Yelle, US Treasury Secretary
Earlier last week, the US Treasury Secretary, Janet Yellen, was on an official visit in China. She said that the Biden administration was trying to persuade China to change its policies. Yellen stated that her team had “difficult conversations” about national security and industrial policies with their Chinese counterparts, according to the UK news outlet the Independent.
“China is now simply too large for the rest of the world to absorb this enormous capacity,” she said, as reported by the UK news outlet. “When the global market is flooded by artificially cheap Chinese products, the viability of American and other foreign firms is put into question.”
The aviation industry in the US expressed dissatisfaction with market access restrictions imposed by China during the pandemic. According to them, the regulations hampered operations, customer service and treatment of US airline crews.
The disparity was further exacerbated in 2022, when Chinese airlines retained access to Russian airspace. For their part, US carriers stopped using that route following, which in turn added significant time and costs to their flights.
On Friday April 12th, China’s Foreign Ministry announced that the increase in direct flights was a mutual decision and was made during a meeting between Chinese leader Xi Jinping and President Joe Biden in San Francisco in November 2023. They noted that improved air connectivity would foster greater interaction and understanding between the two countries.
