NPD Travel Retail Logo

Welcome to NPD Travel Retail

(formerly Counter Intelligence Retail)

We specialize in global traveler statistics, data driven insight, and activating against trends for all major categories sold in duty free and travel retail.

Skip to main content

China-Canada air capacity moderates in 2018 but remains a key market

As reported by CiR last year Chinese travel to Canada has soared recently, driven by a self-generating blend of supply and demand as airlines continue to invest in new routes between the two countries, and more and more Chinese tourists carry on their search for new, exciting and off-the-beaten-path destinations.

Growth in capacity between China and Canada grew exponentially between 2013 and 2016, registering growth of just +6.4% in 2014, followed by spurts of +13.7% and +28.6% in 2015 and 2016 respectively. While a slight slowdown in 2017, growth still exceeded +20% in 2017, driven by a new air services agreement in December 2016 and the subsequent inauguration of several new routes. 

As recently as 2013 passengers could only fly from four airports in China to Canada: Beijing, Shanghai Pudong, Guangzhou and Shenyang. Between then and 2017 this total has risen to eight, with the addition of flights from Qingdao, Nanjing, Xiamen and Zhengzhou. In 2018, the total number of airline routes between the two countries currently stands at eighteen (on fifteen different airport pairings) which will soon rise to nineteen when Hainan Airlines launches its third Canadian route, from Tianjin to Vancouver, in May.

With the addition of this new service from Tianjin, Vancouver will cement its position as the number one gateway into Canada for Chinese passengers, accounting for eleven of the nineteen routes into the country, more than twice as many as second placed Toronto (5). The other airports boasting direct links to China are Montreal (2) and Calgary (1). This will see Vancouver’s share of inbound Chinese capacity rise to an impressive 52%.

Despite total capacity levelling out somewhat in 2018 with growth of just +5.2% in the eight months to August, which will see the country fall significantly below the global average for outbound international flights from China (+10%), Canada will remain a key market outside of APAC. The country currently ranks fourth overall in terms of scheduled capacity in 2018, up from sixth in 2015, although growth of +10.1% has seen it fall one place from its 2017 high of third, surpassed by the UAE.

“Although we have seen huge increases in capacity from China in recent years, it is also important to realise the origins of said increases,” says CiR Founder and President, Garry Stasiulevicuis. “While traditionally routes into Canada originated in rich, first tier Chinese cities such as Beijing and Shanghai, which between them accounted for over 80% of capacity in 2013, many of the new routes in recent years have come out of tier 2 or 3 cities. These cities accounted for just 4% of flights into Canada in 2013, but have since more than doubled their market share to 9% in 2018. This presents Canadian retailers with a potentially different shopper.”

Focussing on the retailers in the country, it is clear that Dufry is best placed to take advantage of the Chinese opportunity in Canada. Holding key concessions at the top two Canadian airports for flights from China – Vancouver, where it operates as WDFG, and Toronto, where it operates as Nuance, as well as Calgary – airports where the global travel retail giant operates stores account for over 90% of scheduled capacity between China and Canada. Aer Rianta, however, with its The Loop stores in Montreal, having been recently named “Best Canadian Airport Duty Free Company” for the second consecutive year at the annual Frontier Duty Free Association (FDFA) Convention, must feel it too is well-placed to capture the highly coveted attention of Chinese travellers.

Latest figures released by the FDFA show that Canadian airport duty free shop sales increased by +11% between January and June last year to total C$217m (circa US$173m)  buoyed by impressive growth of +27% in June alone.  This could have been aided by the huge influx in seats from the industry’s top-spending nationality, now the country’s third largest source market.

Destination Canada reported their “best ever year” in 2017 with total tourist arrivals of 20.8 million, an increase of +4% versus 2016 based on preliminary estimates from Statistics Canada, surpassing the previous record set way back in 2002 by almost a million. The top markets for arrivals were the USA (+3%) and the UK (-4%), followed by China (+12%), with other key Asian nationalities and known good spenders such as India (+18%) and South Korea (+17%) also displaying considerably growth, while Japan, (<+1%) remained constant. “The Canadian government is investing wisely in Canada's tourism sector, with facilitative measures such as opening new visa application centres in China, and will surely be feeling positive that current trends can continue as they celebrate the Canada-China Year of Tourism this year,” continues Stasiulevicuis.

“So while capacity growth out of China to Canada appears to be moderating, a major opportunity still exists to target this key industry nationality, particularly in Vancouver and Toronto, and although routes out of Beijing and Shanghai remain essential, understanding the profile, behaviour and wants of citizens from tier 2 and 3 cities is also becoming increasingly important.”