Earning Their Wings

Launched less than a year earlier, the route operated every Wednesday and Saturday from Wenzhou, Zhejiang Province – a coastal city of nearly 9.8 million population and around 500 kilometers south of Shanghai, with average occupancy exceeding 75 percent.　

Most Chinese passengers use the flight for business or visits home, as Madrid has a sizable Wenzhou community. “The Wenzhou-Madrid flight impressed me with its high occupancy,” Liu Li (pseudonym), a Chinese woman living in Spain, told NewsChina.　

Liu said she regularly took the flight for her annual family visit to Shanghai. “It’s much cheaper to fly to Wenzhou first and then transfer to Shanghai rather than flying direct,” she said.　

The suspension was due to low ticket sales in November and limited airport capacity, officials at Wenzhou Longwan International Airport said. The route resumed operations on November 30, 2024, running once a week, with plans to restore the twice-weekly schedule in January 2025.　

Public speculation suggested that low ticket prices and the potential withdrawal of local government support may have contributed to the decision.　

While airport officials have yet to comment, such speculation is not unfounded. In July 2024, the Civil Aviation Administration of China (CAAC) announced that government subsidies would no longer support international flights to smaller cities outside a handful of designated hubs – a policy in place since 2004. Industry analysts fear this policy change could challenge the sustainability of international flights to smaller cities, potentially forcing many routes – by both domestic and international carriers – to shut down.

Such flights surged in the 2010s as airports in major cities struggled to keep up with demand and local governments sought to elevate their global profile. The general standard for subsidies was three years, but local governments had leeway to shorten or extend these periods.　

Though some trialed routes eventually managed to turn a profit, many remained dependent on government subsidies. For example, a flight from Tokyo to Changsha, Hunan Province, operated by China Southern Airlines was discontinued in 2018 after three years. During this time, Changsha provided the airline with subsidies of 12 million yuan (US$1.7m).　

“Airlines decide whether to launch a route, but government subsidies play a significant role,” a senior marketing executive with a domestic airline told NewsChina on condition of anonymity. “If subsidies cover the marginal costs of a new route, airlines are incentivized to operate it since they’ll profit as long as the flight runs.”　

Post-pandemic, local governments once again ramped up subsidies to boost international flights. Reports highlighted that Xiamen, Fujian Province, Sanya, Hainan Province and Dalian, Liaoning Province offered major subsidies for new routes.　

A 2023 document from Xiamen outlined subsidies between 820,000 yuan (US$117,100) and 1.06 million yuan (US$151,400) per intercontinental flight, depending on the route distance.　

These subsidies originally aim to reduce airlines’ risks in starting a new route. However, as local governments face increasing financial strain, public criticism has grown louder.　

“Approval for subsidies has tightened over the past two years, with precise calculations now required for each flight,” Jiang noted. He added that industry experts have long urged local governments to avoid rushing to invest in international flights, many of which fail to turn a profit.　

Amid financial tensions, the CAAC directive in July 2024 on withdrawing subsidies came as a welcome move to many in the industry. However, without detailed implementation guidelines, no city or province wants to be the first to suspend its subsidized routes.　

“Halting subsidies could simply shift flights to regions still offering them,” Jiang explained. “And who would bear responsibility for the economic losses caused by suspending an international route?”　

He pointed out that freight routes are even more reliant on subsidies.　

Zou Jianjun, a professor at the Civil Aviation Management Institute of China in Beijing, warned that without concrete rules, the CAAC directive might fail to curb local government subsidies. He recommended further clarifying which flights are ineligible for subsidies and creating a robust supervision system.　

“The simplest solution would be for the CAAC to set a clear deadline for ending subsidies,” Jiang suggested.

The practice reached its peak in 2017, following a joint document by the National Development and Reform Commission and the CAAC promoting a national plan for civil airports.　

However, as the number of flights grew, sustaining them became increasingly difficult.　

In 2016, German carrier Lufthansa cited low demand for suspending its flight from Frankfurt to Shenyang, Liaoning, after four years, one of the first setbacks amid a boom in international flights in smaller Chinese cities. Though the route was reinstated in 2018, it was later halted during the pandemic and has not resumed.　

Also in 2016, Australian airline Jetstar Airways canceled its route from the Gold Coast to Wuhan, Hubei Province, and British Airways discontinued its flight from London to Chengdu, Sichuan Province.　

Experts attributed these suspensions to low occupancy rates after the standard three-year trial. Similarly, US-based United Airlines canceled its service between San Francisco and Xi’an, Shaanxi Province in 2017, less than two years after launch, due to insufficient demand.　

Despite calls for a rational approach to increasing international flights, local governments have continued pouring resources into these initiatives.　

In 2021, Chen Huan, an employee at CAAC subsidiary Capital Airport Holdings, revealed in a CAAC think tank article that Jiangxi Province, one of the less developed regions in Central China, allocated over 400 million yuan (US$57.1m) in flight subsidies in 2015. By 2019, the figure had skyrocketed to 1.8 billion yuan (US$257.1m). Meanwhile, Shenzhen, Guangdong Province, a major metropolis bordering Hong Kong, opened nine new intercontinental routes in 2018 and added three more the following year.　

A 2013 China Business News report cited internal CAAC statistics indicating that in 2012 alone, 18 provinces and municipalities collectively provided over 600 million yuan (US$85.7m) in subsidies to 107 international flights operated by 63 foreign airlines. Proponents of subsidies argue that a single international route can generate GDP equivalent to three or four domestic routes combined.　

Data from market analysis firm CAPA - Center for Aviation showed that between 2014 and 2018, Chinese airlines launched 78 intercontinental routes – more than double the number in the previous five years. The growth was especially pronounced in second- and third-tier cities, where new routes far outpaced those in first-tier cities. 　

However, Lin Zhijie, an aviation analyst, noted that while all flights between China and the US averaged 79.8 percent occupancy, routes originating from second-tier cities often fell below this benchmark.　

“Many of these new flights struggle to sustain themselves after several years, yielding no return on subsidies. They’ve become vanity projects for local governments, who are essentially paying to transport empty seats,” the former marketing director of a domestic airline told NewsChina.　

Chen Huan’s article highlighted the lack of clear directives for how subsidies should be used. These flights are often discontinued when the subsidies run out.　

Wu Jianrui, a researcher at the China University of Political Science and Law, argued that the increase in routes has fragmented the market, weakening the competitiveness of major hubs.　

The CAAC’s July directive acknowledged these challenges, citing poor strategic planning, weak hub competitiveness, inefficient coordination and inadequate international services as key issues in China’s aviation sector.　

“These problems stem not from local government subsidies but from the allocation of traffic rights,” an insider in the civil aviation industry who refused to reveal his name told NewsChina. He added that the directive signals a major shift in aviation policy – from supporting regional airports for international routes to strengthening the major hubs of Beijing, Shanghai and Guangzhou.　

A major feature of the CAAC directive is its “3+7+N” model. While “3” means enhancing capacity in Beijing, Shanghai and Guangzhou, “7” points to developing international hubs in seven major cities. These include Chengdu, Shenzhen and Xi’an, as well as Kunming in Southwest China’s Yunnan Province, Harbin in Northeast China’s Heilongjiang Province, Urumqi in Northwest China’s Xinjiang Uygur Autonomous Region, and the megalopolis of Chongqing.　

“N” designates cities as regional hubs. Though 12 are named, like Changsha, Xiamen and Wuhan, more could be added in the future.　

To prevent market distortion and ensure fair competition, the directive also calls for stricter supervision of flight subsidies. “With better traffic rights allocation, local government funding can be effectively channeled to support transportation,” Lin said.

For cities excluded from the “3+7+N” model, local governments, according to Jiang Yu, must focus on maintaining essential flights and stabilizing passenger flows.　

Since October 2022, Zhejiang Provincial Airport Group has launched three intercontinental routes from Wenzhou to Rome, Milan and Madrid – destinations with significant Wenzhou migrant communities.　

By the end of September 2024, data from Wenzhou Longwan International Airport showed that these routes had an average occupancy of over 70 percent, with the Rome route exceeding 80 percent.　

“The three intercontinental routes can sustain themselves and even turn a profit during peak travel seasons, such as summer vacations and the Spring Festival holiday,” a representative from Zhejiang Provincial Airport Group told NewsChina.　

Wu Xiaoyan, the group’s marketing director, revealed that plans for an Uzbekistan Airways flight from Tashkent to Hangzhou began in August 2024. On November 17, 2024, the route had achieved over 70 percent occupancy on its first day. Remarkably, the route has not yet applied for government subsidies.　

However, Jiang Yu emphasized that traffic rights and air timetables are of greater concern than subsidies. For cities outside the “3+7” list, obtaining traffic rights in other countries and regions is increasingly unlikely. For instance, a city where Jiang Yu is based had to suspend a long-haul flight to South America due to a lack of traffic rights.　

“Smaller cities face significant challenges in securing timetables to connect with hub airports in Beijing, Shanghai and Guangzhou. Flying to a provincial capital for a transfer can often be more expensive than taking a train,” Jiang said. “Connecting to other provincial capitals or regional hub airports is also costly and heavily reliant on the development of international aviation in those regions.”　

The former marketing executive of a local airline who spoke anonymously highlighted a lack of clarity from the CAAC regarding the definition and role of the “7” hub airports for international aviation.　

“In southwestern China alone, three listed hubs – Kunming, Chengdu and Chongqing – are competing fiercely for resources. Meanwhile, several other listed hubs seem ill-equipped to compete in the international market, given their low rankings in passenger turnover and international transportation volumes,” he said.　

In contrast, some cities with strong potential for international aviation are excluded from the list. It is also unclear whether these cities fall under the “N” category.　

Even regions with market demand and the financial capacity to sustain international flights face obstacles, such as restrictions on subsidies and limited access to traffic rights and favorable timetables.　

“The current restrictions fail to consider the operational realities of existing international flights. Decisions are not based on international transportation rankings or local governments’ financial capabilities but instead follow the CAAC list,” another industry insider who declined to reveal his name told NewsChina. “It’s like giving selected students a head start while barring others from catching up. There’s a need to rethink how to optimize these policies.”　

Cui Xinyu, a member of the CAAC expert team on branch and regional flights, believes the market would be better at playing the decisive role in resource distribution.　

“It’s not that second-and third-tier cities are forbidden from launching international flights. If local governments believe the market is promising, they can develop routes on their own and bear the consequences. The key is to move away from reliance on government subsidies,” he told NewsChina.