Chinese airlines see shrinking profits

China Southern Airlines' profits fell 42% in Q1 2017
China Southern Airlines’ profits fell 42% in Q1 2017

Despite continued strong passenger growth, Chinese airlines experienced declining profits in the first quarter of 2017.

The China Securities Journal, which is published by the state-run Xinhua news agency, reported this week that profits at three of the country’s largest carriers plunged in Q1.

China Southern Airlines, Asia’s biggest carrier by passenger traffic, suffered a 42% drop in net profits to CNY1.55 billion (US$225 million) in the first three months of the year, while Air China’s profits fell 40% to CNY1.47bn and Hainan Airlines slumped 42% to CNY835m. Figures for China Eastern Airlines were not available.

All three of the airlines experienced similar trends, with rising revenues and passenger traffic offset by higher expenses, driven by fuel costs.

China’s largest low-cost carrier, Spring Airlines, also suffered, with a 17% drop in Q1 profits.

Passenger traffic in China continues to surge however; the country’s airlines achieved a 13.8% increase in passenger trips in March 2017, following growth of 11.8% and 9.8% in January and February respectively, according to the Civil Aviation Administration of China (CAAC).

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