China Eastern at Vienna Airport: Sanctions and Their Consequences

20 August 2024

 

In the spring of 2024, it was announced that the Chinese airline China Eastern would begin connecting its home hub, Shanghai-Pudong, with Vienna Airport twice weekly starting June 22, 2024, using an Airbus A330-200. Based on annual passenger volume, the airline is the second largest in China (after China Southern), with a current fleet of around 620 aircraft (excluding subsidiaries). The flights were made available in booking systems but had to be abruptly removed. To date, the planned flights have never commenced. What’s behind this? The reason lies in Austria's refusal to grant traffic rights. But how can this be? After consulting with the Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation, and Technology, and conducting further research (feedback from Vienna Airport was not available), a comprehensive picture emerges, comprising several distinct pieces based on the following facts: 

1.      Due to the military conflict between Russia and Ukraine, the EU, among others, has imposed economic sanctions on Russia, leading to the closure of Russian airspace to EU airlines. As a result, affected airlines must take significant detours to continue serving their destinations, including those in China. 

2.      China has not imposed any sanctions on Russia in this context and is therefore still allowed to use Russian airspace. This allows Chinese airlines to offer more direct, faster, and economically advantageous flights to Europe compared to their European competitors. 

3.      Austrian Airlines has been operating regular flights on the Vienna-Shanghai route for years (with a COVID-19 interruption). Currently, the airline is affected by the Russian airspace closure and must take detours. 

4.      China Eastern had never regularly served Austria before and had to apply for traffic rights for the desired route. However, Austria denied the Chinese airline these rights. The reason is the Russian airspace closure, which gives China Eastern (economic) advantages over Austrian Airlines. Thus, Austria is protecting its national airline from competitive disadvantages against China Eastern. The refusal of traffic rights is justified by the assertion that the request currently conflicts with broader economic interests. 

5.      Therefore, the launch of flights by China Eastern from Shanghai-Pudong to Vienna is uncertain. 

So much for the facts. But what does this mean in concrete terms, and what are the different perspectives on this issue? 

1.      Vienna Airport: For any airport worldwide, it is essential to offer new destinations, new airlines, and new flights to its catchment area with its diverse passenger groups and travel behaviors. China Eastern would have been a new airline for Vienna Airport. Attracting a new airline to an airport is a tough and lengthy process, as every airport competes with others (for example, Vienna with Munich or Budapest). The effort is even greater when it involves a new airline with a long-haul destination—it can take several years before the first flight occurs. Therefore, refusing traffic rights is very unfortunate for Vienna Airport, as China Eastern cannot be welcomed as a new airline. China Eastern would have brought new passengers to Vienna with its flights, flight times, and reputation, and would have offered further attractive connecting flights via Shanghai-Pudong. Additionally, it would have been a carrier from a different alliance (SkyTeam) than the currently dominant one on site (Star Alliance), slightly balancing the local airline portfolio. 

2.      Traffic Rights: According to the Federal Ministry for Climate Action, Environment, Energy, Mobility, Innovation, and Technology, traffic rights are generally negotiated within the framework of air transport agreements. Legal provisions for this are set out in the BGzLV (Federal Act on International Air Transport). Adjustments to the exercise of traffic rights can be made based on an evaluation of public interests. Regarding the aviation market between Austria and China, the following points are noteworthy: 

a. Austrian Airlines has been operating regular flights between Vienna and Beijing, as well as Shanghai-Pudong, for many years. The airline also used to operate flights to Hong Kong. However, Hong Kong, due to its history and location, may be treated differently in this context. 

b. Air China has been serving the Vienna-Beijing route for many years. In the spring of 2024, it was announced that the frequency of flights would increase from three times a week to daily (from July 1), and this was implemented. 

c. Hainan Airlines operated regular flights from Shenzhen to Vienna before COVID-19. As of May 29, 2024, the airline has resumed this route. 

d. China Southern used to operate the route from Guangzhou via Urumqi to Vienna with regular flights before COVID-19. A return of the airline on this route, or to Vienna in general, is currently not anticipated. 

e. Eva Air and China Airlines have also been operating regular flights to Taipei in Taiwan for many years. China views Taiwan as part of China, while Taiwan sees itself as an independent state. The extent to which this affects traffic rights is unknown. Austria, in line with the vast majority of the international community—including all EU member states—follows the "One-China Policy." Austria does not maintain diplomatic relations or diplomatic representations with Taiwan. 

The above list of airlines, routes, and timeframes suggests some conclusions. It seems that there is no issue from the Austrian side when old or existing traffic rights are reused, even if they clearly offer economic advantages to Chinese airlines, as they are allowed to use Russian airspace. This is evident in the case of Air China, which increased its flights in direct competition with Austrian Airlines. When routes are reactivated by airlines (as with Hainan Airlines), Austria does not object, and permission is granted (probably based on old traffic rights). China Southern could expect a similarly positive decision if it were to reactivate its old route from Guangzhou to Vienna via Urumqi. If any Chinese airline were to connect Vienna Airport to a new market in China (for example, Chengdu), it can be assumed that the green light would also be given. It gets interesting when considering whether another Chinese airline might apply for traffic rights between Beijing and Vienna. Anything other than a refusal of traffic rights would likely be a surprise. 

3.      Sanctions: The economic sanctions imposed by the EU and other countries on Russia have, in this specific case, resulted in European airlines being unable to use Russian airspace. By supporting these sanctions, Austria has violated its neutrality law and, in doing so, abandoned its neutrality. As a study by the "German Institute for International and Security Affairs" titled "Effects and Effectiveness of International Sanctions" from April 2024 shows, sanctions are more often unsuccessful than successful in achieving the desired policy and behavioral changes and also lead to negative (counter) effects in the countries that impose the sanctions. The study concludes the following: 

a. Every use of economic coercive measures has potentially problematic effects. It is indeed questionable whether "smart sanctions" can exist that are both economically effective and human rights compliant. 

b. "Those who impose sanctions must expect the human rights situation in the target country to worsen." 

c. "The threat and use of economic sanctions are not suitable for reducing the intensity of a violent conflict." 

d. "EU sanctions are intended to influence policy changes while minimizing the impact on those not responsible for the sanctioned policy." 

e. "Economic sanctions often have considerable negative, even counterproductive, effects in the sanctioned countries: on human rights, poverty and inequality, public health, life expectancy, child mortality, the level of repression, and state control over the economy." 

It is therefore not surprising that such circumstances have also led to a public initiative to "Strengthen Austria’s Neutrality." 

In summary, the perspectives on this issue are multifaceted and worthy of discussion. It is clear that due to the flight ban on China Eastern, new guest potential from China cannot be tapped. The Austrian economy, and more specifically, tourism and Vienna Airport, are missing out on potential revenue. Two shareholders of Vienna Airport AG are public entities: the states of Vienna and Lower Austria each hold 20%, which also results in lower (tax) revenues. The current flight plan application will continue to be processed by the responsible authority, Austro Control GmbH—the end is likely only in sight with the lifting of the Russian airspace ban, which is linked to many other aforementioned factors. Austria's authorities are by no means neutral when granting traffic rights, and not everyone is treated equally. Sanctions are a highly controversial tool for imposing "order" according to one's views, and they have a wide range of repercussions, including on the countries that impose or support them. All in all, this situation could indeed be seen as a self-inflicted setback for Austria. 

I would be happy to receive feedback on this article via email. Thank you!