Air China and China Eastern Airlines carried fewer passengers in June than a year earlier due to a combination of factors, which include the Sichuan earthquake.

The decline in traffic at two of China's three major airlines extended a drop in May linked to the quake in Southwest China, which curbed tourist travel to scenic Sichuan province and led to the cancellation of conferences and other events.

Air China, the country's flag carrier, flew 2.67 million passengers in June, down 7.5 percent year-on-year, with volume on international routes down 15.5 percent while domestic traffic fell 5.3 percent.

The company said the weak air transport demand and traffic is a result of a combination of factors and is only temporary, according to its newsletter.

Aside from the quake's impact on tourism, another factor the airlines cited for the ridership decline is Beijing's heightened security measures before the Olympic Games that have made it difficult to obtain visas.

China Eastern's passenger volume fell 11.6 percent to 2.75 million in June, with international service down 24.6 percent and domestic service shrinking 9.7 percent.

The declining volume has compounded headaches from higher fuel prices, which boosted operating costs, and marks a rare reversal for an industry that has been buoyed in recent years by China's strong economic growth.

For the first half of the year, Air China carried 16.56 million passengers, down 0.8 percent year-on-year, while China Eastern's passenger volume slipped 1.23 percent to 18.11 million, the airlines said in separate statements.

Air China reported a 4.9 percent dip in cargo volume in June to 74,509 tons, while China Eastern's freight volume fell 5.9 percent to 69,400 tons. Air cargo demand has boomed in China, fueled in part by overseas trade, although export growth slowed substantially in June due to global economic weakness and the appreciation of the yuan.

China Southern Airlines, China's largest carrier by fleet size, and Shanghai Airlines have yet to release June figures. Both also reported a slip in passenger numbers in May.

Industry executives have said they expect a pick-up in air traffic again in September, when airport security checks return to normal.

Reuters

(HK Edition 07/17/2008 page2)