- Trips abroad are costly versions of what they were in 2019, and flights are not expected to return to pre-pandemic levels for at least several months
- About 110 million border crossings from mainland China are expected in 2023, which would be about two-thirds the level of 2019.
Nie Min has her trip locked in – eight days to Iceland in September with seven other retirees from Shanghai who have joined the same tour group.
“I want to travel more while my legs are still flexible,” the 58-year-old said, noting the whole trip will cost nearly 40,000 yuan (US$5,800), which she said was basically twice as much as it would have been in 2019.
China reopened its borders to international travellers and resumed processing passport applications for mainland residents in January, almost three years after closing borders to nearly all travellers in March 2020 and imposing strict quarantine measures under its zero-Covid strategy, hammering the tourism sector.
For frequent travellers like Nie, the first thing she did was check travel schedules.
Despite the price of flights still being relatively high, she said that from a budget perspective, she is willing to spend an extra 20 per cent to treat herself for “getting through the coronavirus pandemic”.
Like Nie, Chinese residents appear to be as enthusiastic about overseas travel as they are about domestic trips.
According to a survey conducted by Bloomberg Intelligence, nearly 92 per cent of the 1,088 respondents were considering at least one domestic or international trip by May. Among the respondents, more than 92 per cent were considering at least one overseas trip, the survey said.
Japan and Korea were the most favoured pair of destinations, with 48 per cent and 43 per cent of respondents respectively wanting to visit, the survey said. And 40 per cent were considering travel to Hong Kong and Macau, while 35 per cent preferred Southeast Asia.
“Outbound Chinese passengers may recover to only 45 per cent of 2019 levels this year,” the Bloomberg Intelligence survey said.
There will be 110 million border crossings from mainland China in 2023, reaching two-thirds of the level of 2019, according to a forecast made by China Outbound Tourism Research Institute.
China was the world’s largest source of outbound tourists before the pandemic, taking 170 million trips and contributing US$253 billion to the global economy in 2019.
“Although we are seeing a steep recovery in the number of people travelling, whether this trend is going to be sustained until the second half of 2023 remains a big question,” Eric Zhu, senior associate analyst for aviation at Bloomberg Intelligence, told the Post.
Zhu said there will be about a 5 to 10 per cent increase in people’s spending on their initial trips, with survey results showing that 80 per cent of respondents intending to travel were planning to increase their travel budgets compared with similar trips in the past.
“[Chinese travellers] may want to splurge on their first trip,” Zhu said, describing it like “revenge travel”.
But he added that whether the splurge will continue depends on “how deep their wallets are”.
“[Travellers] can allocate more budget on travelling but probably might cut down on some other items,” he said. “We are going to see some changes in the proportion on their allocations of spending”.
Economic headwinds have weakened consumption as household savings in the world’s second-largest economy increased by 17.4 per cent in 2022, year on year, and marked the quickest pace since 2010.
The airlines are taking a wait-and-see attitude to bringing the seating capacity back
Zhou Mingqi, founder of tourism consultancy Jingjian Consulting, said “recovery resilience [in the tourism sector] has been very weak”, as there has been a significant decline in consumer spending, and income expectations were adversely affected by the coronavirus pandemic.
“Travel is an optional consumption that is only done when you have money and leisure, and this will obviously be affected by the downward spiral of consumer power in the long run,” Zhou said.
Although people’s willingness to travel overseas is increasing, flight recovery seems to be slower in catching up with demand.
“The airlines are taking a wait-and-see attitude to bringing the seating capacity back,” Timothy Bacchus, senior industry analyst for aviation at Bloomberg Intelligence, told the Post.
He added that there is still some hesitancy among Chinese to travel abroad. “It is going to take some time for the international side to recover,” he said.
In February, carriers added 355,000 international seats compared with January. The international capacity was operating at 18 per cent of the same month in 2019, according to the global travel data provider OAG.
Hong Kong, Macau and Thailand ranked top three last month, in terms of mainland China’s international airline capacity.
Looking forward, the recovery of international flight capacity scheduled from April to June is projected to reach about 65 per cent of 2019 levels, Rob Morris, global head of consultancy at Ascend by Cirium, said in a report.
Morris said that airlines have restored some elements of capacity in the first quarter, but they will refrain from scheduling further capacity additions in the second quarter.
“Visa availability, passenger confidence, and the potential reaction to increasing Covid-19 cases are several potential issues that need to be fixed before the market can truly recover,” he said, adding that airlines may want to see how all of these play out before committing fully to the market.
Starting from Friday, flights between South Korea and China will gradually return to pre-coronavirus levels after the South Korean government lifted restrictions on the issuance of short-term visas to Chinese citizens earlier in February.
As Korea tops the favourite destinations among the respondents, Bacchus said there should be time for airlines to raise capacity as the demand reveals itself, particularly for the summer.
But he also said that it is not entirely flexible, because as airlines fill up their schedules to other markets, they may be reluctant to reduce others if aircraft are committed elsewhere.