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在线翻译:
szdaily -> Markets
Airlines slow down overseas expansion
    2017-August-29  08:53    Shenzhen Daily

FOR years, China’s three major airlines kept adding flights on international routes to chase after a rising middle class that can afford to fly overseas. Now, they are slowing that down in favor of the local market.

In the first half of 2017, Air China Ltd., China Eastern Airlines Corp. and China Southern Airlines Co. increased international seats at less than half the pace of the same period last year, according to data from the carriers. Two of them have stepped up domestic capacity.

The pullback on overseas routes may be a sign that domestic airlines are eschewing aggressive expansion and paring cheaper tickets on long-haul flights from smaller cities to destinations like New York and Sydney.

Local passenger traffic rose as much as 16.7 percent in May —the most in more than two years — and grew more than twice the pace of international services in the first six months, data from the Civil Aviation Administration of China show.

“If you look at margins, our forecast is that domestic is more profitable,” said Andrew Lee, an analyst at Jefferies Group LLC. “If there’s a bit more focus on the domestic side, that would be more positive for yields.”

Investors will be closely watching the carriers’ domestic yields, an indicator of profitability measured by the money earned from flying one passenger per kilometer, as the three carriers release first-half earnings this week.

Shanghai-based China Eastern may report a 28 percent jump in net income to 4.1 billion yuan (US$617 million). Beijing-based Air China’s profit probably rose 9 percent to 3.8 billion yuan and Guangzhou-based China Southern may say profit declined 6 percent to 2.9 billion yuan, according to the median estimates in a survey of three analysts.

“Last year, their attitude was ‘let’s take a hit on yields to increase capacity,’” said Lee. “This year, there could be a slight shift to focus more on yield management.”

International yields in 2016 were about 26 percent less than domestic on average for the three airlines, data provided by them show. While the overseas measure declined about 13 percent from a year earlier, the average domestic yield slipped about 2 percent.

Seat capacity on local routes jumped 8.9 percent in the first half, from 2.4 percent a year ago at China Southern, while it rose 8.7 percent from 7.8 percent at China Eastern. It stayed flat at about 5 percent for Air China.

(SD-Agencies)

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