Embraer has released a new market report analysing profitability challenges in China’s airline sector and identifying strategic opportunities for carriers to strengthen financial performance. The report, A New Course for Profitability in China’s Aviation Market, was launched on 17 November at the Embraer Airline Business Seminar China 2025 in Huizhou.
The study argues that China’s aviation market remains hindered by intense competition on major city-pair routes, with airlines pursuing the same high-density corridors and undercutting each other on fares. Embraer refers to these saturated routes as the industry’s “Red Ocean”, where overlapping capacity, price pressure and limited differentiation suppress margins.
According to Embraer China managing director Patrick Peng, restoring profitability will depend less on growing passenger volume and more on improving pricing power, fleet strategy and market selection. The report emphasises that average fare and load factor have a stronger impact on margins than incremental cost reductions, making deep discounting an increasingly counterproductive strategy.
The report highlights opportunities in what it calls “Blue Ocean” markets—routes with limited competition and structural advantages. These include underserved Tier 2, 3 and 4 cities, short-haul international connections, routes not aligned with China’s extensive high-speed rail network, and secondary point-to-point markets. Embraer argues that these segments offer better prospects for yield protection and sustainable returns.
Fleet right-sizing is presented as a central requirement for unlocking these markets. Embraer says that integrating newer, smaller narrow-body and regional aircraft enables more frequent services without adding excess capacity, improves cost efficiency across fuel and maintenance, and better aligns supply with demand.
The findings were presented to senior executives from Chinese and international airlines, aviation associations, consulting firms and financial institutions attending the Huizhou seminar. Discussions focused on how carriers can adapt to ongoing competition pressures, shifting passenger patterns and the influence of China’s expanding high-speed rail network.
Embraer says that airlines capable of combining targeted market expansion, operational discipline and diversified fleets will be best positioned to convert rising traffic into durable profitability.
