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China’s rising middle class fuels Full Service Carriers market growth

China’s rising middle class fuels Full Service Carriers market growth

The number of seats sold by the Chinese Full Service Carriers (FSC) in 2018 looked to a staggering 561.3 million surpassing the Low Cost Carrier industry (LCC) of 47.3 million.

Industry analysts forecast that the Chinese FSC market will overtake the US by 2023 in terms of number of seats sold by a FSC per destination reaching 929 million compared to 872 million in the US. 

Latest research found that by 2023, reflective on the growing connectivity of the Chinese travelers, the FSC industry in China seats sold will grow at a compound annual growth rate (CAGR) of 10.6% (2018-2023) to reach approximately 100 million (929 million). Despite a small dip in 2018/2019 due to a decline in Chinese travelers to Thailand, load factor more or less remains high highlighting that industry growth is almost consistent with the consumers’ demand.

At the beginning of 2019, 29 Chinese airlines began international operation in comparison to solely 15 in 2016, reflecting the mass growth of the industry.

However, foreign airlines have been gradually losing market share due to aggressive competition and expansion from Chinese airlines. Leading players Air China, China Eastern and China Southern took up 61% of international seat capacity from Chinese airlines or including foreign airlines 33%, according to the Centre of Aviation (CAPA) in 2019.

Chinese government’s freedom to allow China state-owned airlines set domestic fares will help to boost sales within the airline industry, particularly with FSC’s. 

With a decrease in unemployment alongside the rise of the middle class, it is not unknown across the travel industry that the Chinese traveler market are traveling more frequently, eager to spend and venturing to further destinations than ever before.

Typically seeking the most technologically savvy products, FSC’s are likely to largely appeal within the Chinese travel market largely due to efficiency and the search for a seamless experience. These factors influence the growth of the industry with key players such as China Eastern and China Southern airlines taking the lead.