BUY2GREECE – Chinese visitors to drive growth in international traffic

More countries are now ready to follow the US lead on eased visa requirements for Chinese tourists. Outbound travel from the mainland is tipped to become the major driver of growth for airlines based in the region. And international traffic for Chinese carriers will increase more than 15 % this year on the outbound tourism boom, outpacing an expected 10-12 % rise on domestic routes, Citi forecasts in a report.

According to report, “The US recently loosened visa requirements for Chinese visitors. The UK, Japan and South Korea also promised to relax the visa application process. We expect more countries to follow this trend in the near future, which should significantly boost international traffic.”

The White House says, in 2013, 1.8 million Chinese visitors added US$21.1 billion to the US economy. A meeting of Apec leaders in November resulted in an agreement between China and the US to extend the visa validity for business and tourism from one year to 10 years.

Air China leads the mainland carriers on North American routes, followed by China Eastern Airlines. Both are expected to secure more growth than their competitors.

UBS Asia transport research analyst Eric Lin estimates Cathay Pacific accounts for up to a quarter of traffic on China-US routes factoring in transits via Hong Kong. Cathay Pacific expects increased demand on its US flights arising from the visa moves.

Commercial director for Hong Kong and Macau at Texas-headquartered American Airlines, Victor Lee, said: “Relaxed US visa requirements will not only bring more Chinese visitors to the US, but also to Latin America”, as a US tourist visa gives entry to various other countries including Mexico and Panama. Chinese airlines’ share of seats on China-EU and China-US routes was below 50 percent, which makes them a promising bet.”

“There will be earnings growth for sure, but revenue growth will be below volume growth,” he said, as carriers vying for market share may compete at the expense of ticket prices.

Relaxed visa policies will bring in more travelers, but most of them will not be corporate travelers, which are the real profitable passengers for airlines,” he said.

According to Japan it would announce the details of its new visa policy for Chinese citizens in the spring after promising to loosen requirements in November.

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