Hawaiian Airlines bails on China

Hawaiian Airlines will drop its service to China this October after the Golden Week celebrations. The move comes amid a growing tariff battle that significantly and adversely affects US-bound travel from China.

These decisions are never easy and this one is especially difficult because we believe in China’s future as a robust market for the Hawaiian vacation experience and we will continue to market one-stop options to Honolulu from cities throughout China on our airline partners. –  Peter Ingram, Hawaiian’s president and CEO

Notable in the statement is Ingram’s recognition that Hawaiian is dependent on the inbound tourism market from China to the Hawaiian Islands to fill its planes. Today’s announcement comes just a week after a report suggested the US will see tourism revenue from China drop by a half billion dollars year over year in 2018. Forward bookings are down 10% for the second half of the year – including an 18% drop during October – against a 5% rise for outbound travel to other countries according to travel consultancy ForwardKeys.

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The hardest hit segment of travel inbound to the US is group bookings of 6 or more passengers. Bookings in that demographic are down 34%, and those are a huge part of the inbound travel to Hawaii. Given the circumstances the move to drop the thrice weekly flights appears a reasonable one.

Hawaiian’s move will suspend the operations in China rather than close them down completely. The company believes in the market and expects that it will recover relatively soon. This is in line with suggestions from other market analysts who believe that an easing of the trade war will quickly deliver a return of tourism. Citing figures from the terrorist attacks in Belgium and France in 2016 and the quick rebound in 2017 as an example, the Chinese are believed to be willing to move fast to restore tours once the surrounding circumstances are settled. Trade issues may prove different than terrorism, however, as the threat is often seen differently from an emotional level.

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Questions also remain about US carrier operations in China given their vacillation on naming Taiwan as part of Mainland China on their websites and other marketing materials. Chinese authorities could punish the US carriers for noncompliance by directing Chinese tour operators to move bookings away from the carriers.

While Hawaiian can use its partnership with JAL to help connect passengers to the islands that market will not be part of the joint venture the two carriers are in the process of implementing. Destinations in China are not currently permitted in JV operations owing to the limited bilateral air services agreement between the two countries.

It is unclear where Hawaiian will redeploy the A330-200 to following the cessation of service to Beijing. The final flight will depart China at 1a on 12 October and arrive in Honolulu at 5p on 11 October. The service operated since April 2014.