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Since the Trump administration began in January, Air China has seen a significant reduction in demand for U.S. flights and may have to reduce some capacity, its top executive for North America said Tuesday in an interview.
Of significant concern is what the airline believes is a notable decrease in the number of Chinese visitors approved for U.S. visas, said Zhihang Chi, Air China’s vice president and general manager for North America. Another issue, he said, is ethnic Chinese living in the United States who might be avoiding returning to China for vacation because they fear they’ll be hassled by U.S. border officers when they return.
For the visa issue, U.S. officials will not share numbers with the airline, but Chi and his colleagues suspect about 15 to 16 percent of potential travelers are having their applications denied. In the Obama administration, he said, denial rates were about 10 percent. Air China can calculate a rough rate because it allows groups to hold seats and cancel tickets for passengers who do not receive visas.
“If this continues, we will have to do something,” Chi said at the Boyd Group’s annual Aviation Forecast Summit in Las Vegas. “We are a for-profit cooperation, and obviously we need to match supply with demand.”
About half of the airline’s customers on U.S. flights buy tickets in China, up from roughly 20 percent five or six years ago, Chi said. The number of passengers from China grew considerably after 2012, Chi said, when President Obama streamlined the visa application process for travelers from China and Brazil.
Chi said Air China has not lodged any formal protests, saying the airline wants to wait to determine whether it’s an “isolated problem.” Air China is retaining the business, he said, but the customers are often going to Europe instead.
“The visa problem is of particular concern for me because people have a choice,” Chi said. “They want to come, but if they can’t, they go somewhere else.”
U.S. administration officials said months ago that they intended to make screening for visa applicants tougher. However, a representative from the U.S. Department of State said there have been no changes in processes for obtaining a Chinese visa.
“There hasn’t been any changes in U.S. law that have corresponded to that type of change,” the government spokesman said. “When we adjudicate visas, every individual decision gets interviewed and that specific interview is always about that person. It is always about, did the person who is in front of me meet the requirements of U.S. law?”
Concerns From U.S. Residents
Visas are not Air China’s only concern. While the airline sells about half of its tickets for China flights in the United States, they’re often bought by Chinese-Americans visiting friends and relatives.
The airline does not have hard data, but anecdotally, Chi said he suspects many of these travelers have been deciding not to return home. The problem, he said, is “immigration concerns” and “noise from the administration.”
“People are concerned about not being able to return,” he said.
He’s not the only executive from an Asian airline who has heard the concerns. John Jackson, a Los Angeles-based vice president for Korean Air, said Korean-Americans may have similar concerns, though he noted there’s little data to back up the claim that they’re avoiding transpacific travel.
“Anecdotally in the Korean market I’m hearing that too,” he said. “But I think it’s overblown, frankly.”
Other Issues Affecting China Demand
In 2015, with business picking up because of changes to visa guidelines, Air China launched a third daily flight on its marquee U.S. route — Beijing to Los Angeles — but Chi said that route is no longer performing as well as in the past.
Chi acknowledged part of the problem may be unrelated to visa issues, noting Chinese airlines have added considerable capacity to the United States in recent years. Little known Chinese airlines, such as Xiamen Airlines and Sichuan Airlines, are now flooding the market with cheap fares. And big ones, including China Eastern and China Southern, continue to add flights.
In recent months, executives from United Airlines, American Airlines and Delta Air Lines have said the Chinese market is relatively weak, though none have mentioned visa issues on earnings calls. Executives have generally said capacity is ahead of demand between the United States and China.
The U.S. carriers tend to view the Chinese market as a long-term play, so they’ve kept most of their flights, and even announced new ones, including American’s upcoming Los Angeles-Beijing nonstop. But in July, United said it will stop flying from San Francisco to Hangzhou, near Shanghai, with the last flight in October.