PARIS – Air-France KLM is lobbying the French government to cap the number of flights that mainland Chinese carriers can make to Europe, according to people familiar with the matter, in a bid to protect European airlines from unfair competition.

The Paris-headquartered airline group’s requests may involve asking for a stay in the current air traffic rights between France and Asia’s biggest economy, some of the people said, asking not to be identified because the discussions are private.

Deutsche Lufthansa is pushing for Germany’s government to take the lead in challenging Beijing over the issue of distorted rivalry, another person said. 

Lufthansa has already said it will pare back services to China, planning to scrap its direct daily flight from Frankfurt to Beijing at the end of October because, amid jet shortages, it is having to deploy fuel-guzzling, older aircraft on that route, making it unprofitable.

Such machinations expose the disagreement between European carriers on how best to curb the rising number of flights from China by Chinese carriers that take shortcuts over Russian airspace, shaving precious hours off long-haul travel, and offer much cheaper ticket prices. There’s some debate about whether to involve national governments or just elevate the matter to Brussels, the de facto capital of the European Union, the people said.

Representatives for Air-France KLM and Lufthansa did not respond to requests for comment.

Lufthansa chief executive Carsten Spohr, speaking at an event in Brussels on Oct 16, said Chinese carriers have an “enormous advantage” because they do not pay emissions trading system costs and have three hours less flight time by cutting through Russian airspace.

“That’s just a disadvantage for us European carriers, which will force us to cut more and more flights, which then reduces the connectivity in Europe,” he said.

More broadly, Europe’s relationship with China is being buffeted by worsening trade tensions, as the EU seeks to target what it says are unfair subsidies and other support that Beijing provides to its companies. The bloc is imposing tariffs on Chinese-made electric vehicles, while China is threatening to retaliate against imports of brandy and large-engine vehicles.

KLM CEO Marjan Rintel spoke out earlier in October, urging EU action against “unfair” Chinese competition, WNL TV reported. “Europe can at least look at how we can prevent that unfair playing field by pricing it or looking at it in a different way,” she said. 

Europe’s airlines have not flown over Russia since the beginning of Moscow’s invasion of Ukraine in late February 2022. Ukraine’s airspace has also been closed since then. That has given Chinese rivals a distinct advantage in terms of costs and hours in the air.

It is not the first time legions of flights from China have rankled other countries. The US took action during the Covid-19 pandemic to curb the glut of Chinese airlines flying into the country with unfettered access while US carriers were being stymied, resulting in the authorities on both sides capping flight numbers.

Lufthansa has said that it’s losing as much as €500,000 (S$713,000) on every one of its soon-to-be defunct Frankfurt to Beijing flights. The three biggest Chinese airlines meanwhile have pulled in 111.1 billion yuan (S$20.5 billion) in subsidies or government grants aimed at encouraging them to operate air links, the carriers’ annual reports show.

Lufthansa and Air France-KLM do typically also codeshare on flights to China with Air China and China Eastern Airlines, and Shanghai-based China Eastern holds a 4.7 per cent stake in the Franco-Dutch airline group. 

However Air France-KLM and China Eastern suspended their codeshare partnership over the pandemic when international travel dried up and never restarted it, one of the people said.

British Airways and Virgin Atlantic Airways have also eliminated some China routes, with Virgin suspending flights between London Heathrow and Shanghai from October.

In the aftermath of the pandemic, European carriers were slow to restore flights to China, largely because of lacklustre outbound demand from Europe. Chinese carriers however added many flights, well beyond 2019 levels, and are offering highly competitive air fares.

By the end of 2024, Chinese airlines will comprise roughly 75 per cent of seat capacity on all flights to and from Germany and France to China, data from aviation firm Cirium show. And they will have 100 per cent of the market on trips to Italy and a 95 per cent share of flight capacity to Britain. BLOOMBERG

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