Why China’s Rebounding ‘Revenge Travel’ Won’t Include The USA

Of late, there have been reports of the resurgence of Chinese air travel demand to international destinations.

Information from officially-controlled media includes pictures of crowded airports and enthusiastic travelers getting on planes and trains and buses over the recent Lunar New Year holiday.

One Chinese travel website, Jing Daily, has described the situation using a term coined last year by William Swelbar of U.S.- based Swelbar-Zhong consultants to describe the boom: revenge travel. This is when sudden demand is generated by consumers ready to get up and go after being cooped up for months due to Covid restrictions.

In the USA, Mr. Swelbar’s research was proven accurate. Over the past 18 months, air travel demand has boomed, particularly to leisure destinations, gobbling up the millions of travel dollars pent-up during the pandemic lock-downs.

But whatever the total China air travel market may do, there won’t be any “revenge” taken on travel to and from the United States. No, it will not return to the robust expansion seen in the years prior to the pandemic.

It is for all intents and purposes, stone-cold dead, and remain that way for the foreseeable future.

As one factor, the Jing Daily description of life in China today is suspect, because it varies markedly from other media sources which depict civil unrest, and not a lot of smiling people boarding airplanes.

So, let’s explore what we can expect. We will start with a figure: fourteen billion dollars.

That is conservatively the amount that Chinese leisure visitors spent in the USA in 2019. That is not the full economic impact, but just the money directly applied to the visit on purchases and in-country travel and accommodations.

Here’s another figure: bupkus. Almost zero.

That’s pretty close to what Chinese leisure visitors spent in the USA in 2022, mainly because there weren’t many of them. This represents a huge hit to a wide range of USA venues that were beneficiaries of this travel sector before the arrival of Covid-19 on U.S. shores.

Let’s take a look at data from our Airports:China™ database:

In 2019, our research indicated air traffic volume between the USA and China at over 8.8 million passengers, combining both ways, including nonstop and connect airline itineraries. Of that, approximately 70% were leisure visitors – equating to 3.1 million people entering the US with an estimated per-visitor spend of $4,500.

It is today barely 150,000 total – combining both ways, and most of that is not leisure travel.

Yes, the pandemic blocked virtually all international travel in China. But while the government in Beijing was shutting down whole cities, there were other changes, both economic and geo-political, taking place. These changes preclude a return to anywhere close to the USA-China traffic seen four years ago, even if Covid disappears completely.

Two key travel drivers have collapsed concurrent with the pandemic. One was a strong Chinese economy, buttressing a growing middle class in major cities which had a growing propensity to international air travel. The other was expanding cross-Pacific business investment on the part of both the U.S. and China.

Both of these drivers are now history. That means, with or without the pandemic, the entire underpinnings of USA-China air traffic demand have been demolished. Chinese middle-class is in tatters, and the growth in the business base has ground to a halt.

The entire USA-China demand mix is also in pandemic-influenced flux. For example, today the largest single US-China air route isn’t from Beijing or Shanghai. It’s between Los Angeles and Xiamen, a city most people in America couldn’t find on a map. And it’s under 7,000 annual passengers, both ways combined.

Covid Is Just Icing On A Demolished Travel Cake. The once-robust Chinese economy that generated this USA traffic is now a growing wasteland, due to a number of reasons that we don’t have time or room here to fully cover, but here’s a couple of points to consider.

In short, the leisure demand among Chinese consumers to visit the Grand Canyon or The Big Apple is pretty thin when factories are not paying employees. Or when millions of middle-class citizens have been defrauded by bogus real estate scams. Or when factories are being closed and moved out of country by foreign corporations, due to production problems or the political issues with Beijing’s policies in Xinjiang, or the constant threats to go to war over Taiwan.

The Chinese economy is so bad that in some cities the members of government patrols who randomly test people for Covid are protesting for lack of pay. Plus, there are reports that millions of unpaid workers in major cities don’t have money to buy train tickets to visit family in rural areas over the Lunar New Year festival.

Point: leisure air travel to America is not at the top of the middle-class bucket list. Plus, the government in Beijing is actively discouraging such travel.

Entering China Isn’t Good Business. Then there is the commercial side. Because of Beijing’s geopolitical stances, China is no longer a secure place for American or most Western business people to go, even without the presence of Covid.

Business travelers are at risk of arbitrary government actions. One executive of an Irish aircraft leasing company took a quick trip to visit their offices in Shanghai. He was refused exit for over a year due to various officials trying to extort $30 million in ransom from his company over a concocted airliner deal. This is not an isolated incident.

Effects Are Seen In Pennsylvania and New York and Las Vegas, Too. This is a hit to the USA economy. The thousands of pre-pandemic Chinese visitors coming to visit Hershey Chocolate World, or to the glass factory in Elmira, or to hit ‘Vegas, are not there coming, anymore.

To be clear, airlines will add back nonstop flights to Beijing and Shanghai. There may be some other Chinese nonstop markets added, but the dynamics that previously generated over almost 9 million air travelers are gone.

U.S. international airlines should plan accordingly. The many retail outlets and tourist venues across the USA that took in millions annually from eager visitors from the Middle Kingdom won’t see those revenues again.

Not for several years, and maybe a government change in Beijing.