Chinese airlines report 189 billion yen loss amid Japan route cuts

Three major Chinese state-owned airlines—Air China, China Eastern Airlines, and China Southern Airlines—reported a combined net loss of approximately 8.2 billion yuan (roughly 189 billion yen) for the first half of 2026. While the first quarter saw profits driven by Lunar New Year travel demand, the subsequent quarter experienced a sharp downturn.

Several factors contributed to these losses. Rapidly rising aviation fuel costs, driven by geopolitical tensions in the Middle East, significantly increased operational expenses. Additionally, the airlines were forced to reduce high-profit routes to Japan following requests from the Chinese government to discourage travel to Japan. This decision followed political friction regarding remarks made by Japanese politician Sanae Takaichi concerning Taiwan.

Data indicates a significant reduction in capacity on routes between China and Japan. For instance, between November and December, seat capacity on Chinese-operated flights to and from Japan dropped by approximately 23.2%. The loss of these lucrative routes, which typically allow for higher fare margins, has severely impacted the financial stability of the three carriers.