China is considering several ways to support financially its struggling airlines which are reeling from the oil and fuel supply and price shock due to the Middle East crisis.
The Chinese authorities are discussing various forms of support, including government-back preferential loans, subsidies, and preferential tax treatment, sources with knowledge of the deliberations told Bloomberg on Thursday.
The last time China had to help and basically bail out its biggest air carriers was during the Covid pandemic, which hurt Chinese airlines the most amid a two-year-long lockdown.
Even after the rebound in travel after the Covid restrictions were eased, Chinese airlines struggled to turn in profits. Since 2019, only China Southern out of the big three airlines has made a small profit, once. This happened in 2025, according to data compiled by Bloomberg.
Losses are set to deepen this year as airlines are struggling, not only in China, amid sky-high fuel prices and continuously tightening global jet fuel market.
Last week, leading Chinese carriers, including Air China and China Southern Airlines, announced that fuel surcharges for domestic routes would be hiked starting April 5.
Oil and jet fuel supplies are constrained as crude and petroleum products are trapped at the Strait of Hormuz, forcing Asian refiners to cut run rates and Asian countries to restrict or ban exports to preserve domestic supply.
The product market came under more severe stress than the crude markets as the war dislocated oil and fuel supplies and sent jet and diesel premiums over Brent to astronomical highs.
The restoration of normal jet fuel flows around the world will take months, even if Iran reopened the Strait of Hormuz today, the head of the International Air Transport Association (IATA) warned earlier this week.
“Without knowing the length and intensity of the war in the Middle East, it is impossible to quantify the full impact that it will have on airline prospects,” said Willie Walsh, IATA’s Director General.
“But some things are already clear. Fuel costs have risen sharply. With tight capacity and thin margins, air fares are already rising. Capacity deployment is also adjusting, particularly for traffic to, from, or through the Middle East, or in areas where fuel supply is an issue.”
By Tsvetana Paraskova for Oilprice.com
