‘The year of the staycation’: Good news for Hainan as Chinese domestic air travel climbs back – ForwardKeys

CHINA. Travel analytics company ForwardKeys reports that domestic air travel in China, which has been recovering slowly in the wake of the COVID-19 outbreak, has now reached over 50% of equivalent 2019 levels. The findings are based on issued air tickets.

Analysis of flight ticketing data by ForwardKeys reveals a significant uptick in last-minute domestic flight bookings in China between 11 and 21 May. During that period, the lead time between ticketing and travel shortened dramatically, ForwardKeys notes. 72% of flight tickets were issued within four days of the travel date, compared with 51% at the equivalent point in 2019.

China domestic air travel ticketing trend; Source: ForwardKeys (Click to enlarge)

ForwardKeys believes that this phenomenon is significantly influenced by students returning to university, as the timing coincides with universities reopening – a milestone that is expected to stimulate Chinese consumers to travel more.

Commenting on the year-to-date performance of Chinese domestic travel, ForwardKeys said: “Looking back to the start of 2020, air travel surged in the first three weeks of January, thanks to Chinese New Year. However, the COVID-19 outbreak spoiled the party and by mid-February the aviation market in China had all but collapsed.

“In the last week of that month, the recovery began; and passenger traffic jumped +62.9% (albeit from a very low base), coinciding with a weak restart of the economy and an increase in seat capacity. Throughout March and April, air travel continued to pick up slowly until it received a fillip from the Labour Day holiday at the start of May.

China domestic air arrivals for the year to date; Source: ForwardKeys (Click to enlarge)

Recovery stronger than air traffic rebound suggests?

“While all this sounds encouraging, it is likely that a stronger recovery is underway in the hospitality sector, with many people choosing to drive or take the high-speed train rather than fly,” ForwardKeys noted.

According to the Travel Willingness Survey conducted by China Tourism Academy and China’s leading online travel agency Ctrip, in March, 41% of travellers said that they would travel by car once the coronavirus outbreak had been contained; 29% would travel by train; 16% would take a coach trip and only 14% would fly.

The rebound in domestic travel spells good news for China Duty Free Group whose acclaimed CDF Mall in Haitang Bay is now the sole global hot spot for travel retail sales
With Chinese domestic tourism set to soar in coming years, China Duty Free Group is accelerating the completion of the magnificent Haikou International Duty Free Mall on Hainan island. The project, which began in 2019, will be completed within three years.

ForwardKeys cited China’s Ministry of Culture and Tourism, which has reported that 60% of vacationers travelled by car during the Labour Day holiday period. This hypothesis is further supported by reports of hotel occupancy now exceeding 60%.

“The revival will certainly be welcomed by everyone in the tourism industry but it needs to be kept in perspective because at the moment the business is mostly local; and, typically, the shorter the distance people travel, the less they tend to spend,” said ForwardKeys.

“As of now, group travel between provinces is still prohibited but comment on various Chinese social media platforms predicts that the ban will be lifted in June, although there is no official news yet.”

Olivier Ponti: “I expect 2020 to be the year of the staycation”

ForwardKeys VP Insights Olivier Ponti said: “At the end of April, we were expecting to see an increase in domestic flight bookings as soon as domestic travel restrictions were eased and that indeed happened. Nevertheless, some restrictions are still in place, so there is potential for further recovery when they are also removed.

“With regards to international travel, [the] current strict restriction which limits [volumes to] 134 flights a week is due to be eased in the coming months, according to China’s aviation authority’s statement on 27th May. However, at this stage, the increased capacity is mainly intended to accommodate the demand of overseas Chinese to return home. I regret that there is no sign yet of a recovery in Chinese outbound tourism.”

He concluded: “I expect 2020 to be the year of the staycation for two principal reasons. First, in China (and in other countries too), the rules applying to international travel are continuously changing, which inhibits consumers from planning and booking a vacation abroad. Second, people are generally reluctant to give up on a holiday, so if a domestic break is all they can get, many will settle for that.”

Breakthrough agreement with IATA

In March ForwardKeys announced a breakthrough agreement to include global ticketing data from the International Air Transport Association (IATA) and the Airlines Reporting Corporation (ARC) in its portfolio of products and services.

ForwardKeys said the addition of the air transaction dataset would help the company expand its current offerings to customers in the tourism industry.

“This moment is like the completion of a jigsaw puzzle; we can now see the whole picture in complete detail rather than just part of it,” says ForwardKeys CEO Olivier Jager

Global trade association IATA represents 290 airlines comprising some 82% of global air traffic. The organisation operates the Billing and Settlement Plan (BSP), which facilitates and simplifies the selling, reporting and remitting procedures of IATA-accredited travel agencies in 181 countries and territories, excluding the US.

ARC specialises in air travel distribution and intelligence, and provides tools and insights to support omnichannel retailing strategies. The company said it settled US$97.4 billion in transactions between airlines and travel agencies in 2019, representing more than 302 million passenger trips.

ForwardKeys said it would now receive a regular feed of global ticketing transaction data settled by IATA and ARC for travel agency bookings – including online travel agencies (OTAs) – as well as direct airline transactions. Customers will be able to search and query against segmentation and profiling criteria on the ForwardKeys platform.

“This moment is like the completion of a jigsaw puzzle; we can now see the whole picture in complete detail rather than just part of it,” said ForwardKeys CEO Olivier Jager. “I am excited for us because it strengthens our USP, but I am also excited for our customers because they will receive even more reliable market intelligence which will help them make better decisions.

Food & Beverage The Magazine eZine