Current China-US Trade Issues Not Expected To Materially Affect Aviation Or Travel Sectors

Boyd Group International has issued a brief Update of the potential fallout on the US aviation sector stemming from the recent imposition of tariffs on some Chinese goods, and the expected retaliation from China.

Boeing: Important To China. Despite the projections from some financial circles that Boeing faces potentially damaging effects on the demand for its products in China, the hard realities of the Chinese air transportation system point differently. China is an important market for Boeing, and Boeing is an important and critical supplier to the burgeoning Chinese aviation sector.

“While many in the financial world are predicting that Boeing is vulnerable to retaliation for US tariff actions, the hard reality is that any such actions would also be damaging to China, which has a pressing need for expanded airline capacity,” noted Michael Boyd, president of Boyd Group International. “There are no viable alternatives, and besides, Boeing and China have been strong partners for the past 45 years.”

China-US Travel To Remain Robust. Also, the potential for China to take action to restrict air passenger traffic to the US, as they have done in disputes with South Korea and Taiwan, is also very low.

“As for passenger volumes to and from China, the nature of this traffic is rapidly moving away from discretionary leisure components and into fundamental business and individual traffic... this is a very different market for China compared to Taiwan or Korea,” Boyd added. “Our forecast of 23 million Chinese visitors to the US over the next five years has not changed.  In fact, it is likely very conservative.”