During China's Labor Day holiday, the number of air passengers fell for the first time since the COVID-19 period. With jet fuel prices surging due to the Iran war's fallout, airlines' expense burden has grown, and higher airfares appear to have shifted some demand to high-speed rail. Right after the holiday, airfares in even medium- and long-haul routes dropped into the 200-yuan (about 42,000 won) range, heightening concerns about deteriorating profitability across the airline industry.
According to China's Ministry of Transport on the 7th, total trips during the May 1–5 Labor Day holiday reached 1,517,128,000, up 3.49% from a year earlier. Of that, air passenger volume averaged 2,108,000 per day, down 5.74% from the same period last year. This contrasts with increases of 4.6% for rail passengers and 3.51% for road travel over the same period. China Business News said, "Since COVID-19, air travel demand during the Labor Day holiday has set a record high each year, making this decline unusual."
The local airline industry pointed to the recent jump in international crude prices and the resulting rise in jet fuel prices as the biggest cause. Li Yanwei, a professor at the Civil Aviation University of China, told China Business News, "In general, jet fuel expense accounts for 30%–40% of an airline's operating costs, but in April it surged to 55%–70%, the highest level in half a century."
Accordingly, from Apr. 5, fuel surcharges rose sharply and airfares increased noticeably. The average price of economy-class tickets (including taxes) on domestic routes during the Labor Day holiday was about 925 yuan (about 200,000 won), up 9.7% from last year. Recently, executives at Air China said in an earnings release, "Fares have been trending higher from April to May. In 2024–2025, excessive competition in the industry led some carriers to operate at a loss, but after fuel prices rose, the momentum for excessive competition weakened somewhat, and airlines no longer released large volumes of low-cost seats."
Some airlines also cut flights. The Iran war's fallout sent international oil prices soaring, sharply increasing fuel costs, and it became difficult to offset the increase in expense solely through higher fuel surcharges. According to the flight statistics platform Hangban Guanjia, the average number of daily flights during the Labor Day holiday was about 15,700, down 2.6% from last year. The drop in domestic routes was larger than in international routes. In addition, among 41 airports in China that each handle more than 10 million passengers annually, 31 saw year-over-year declines in arrivals and departures, with 12 of them down more than 5%.
Experts also said the spring break system, implemented for the first time this year in some cities, dispersed travel demand, and intensified competition from high-speed rail also affected the decline in air travel demand.
Amid this, as the Labor Day holiday ended, cooling demand triggered a sharp drop in airfares. On Chinese travel platforms, even medium- and long-haul routes such as Shanghai–Sanya (about 1,900 km) and Beijing–Haikou (about 2,300 km) reportedly featured tickets in the 200–300 yuan (about 42,000–63,000 won) range. A Chinese airline industry official said, "Even if we raise fuel surcharges, we cannot fully offset the increase in jet fuel expense," adding, "More flights are expected to fall into a vicious cycle of 'the more we sell, the more we lose.'"