(Yicai) April 29 -- Joy Air has suspended all passenger flights just days before China’s May Day holiday, underscoring the financial and operational challenges faced by regional carriers across the country.

Employees were informed after work on April 27 that all of Joy Air’s flights would be grounded for the rest of this month due to operational difficulties, Yicai learned. Its website shows that all flights have been canceled for May 1, and online travel agencies show no availability beyond that date.

The May Day holiday is one of China’s peak travel seasons, with millions of people taking to the roads, rails, and skies to visit family, go sightseeing in the country, or travel abroad.

The Xi’an-based company has not yet responded to a request for comment from Yicai.

China’s regional airlines face intense competition, not only from major carriers such as Air China and China Southern Airlines, which operate extensive domestic and international networks, but also from the country’s vast high-speed rail system.

They often find themselves competing with bullet trains, particularly on short-haul routes, according to industry sources. In 2023, around three-fourths of regional routes offered only one flight a day, and their average passenger load factor -- the percentage of available seats on a flight occupied by paying customers -- was six to seven percentage points below that of major routes, according to industry data.

Joy Air has had several changes of ownership since being set up in 2008. Its current controlling entity is the city government of Xi’an. When China Eastern Airlines transferred its stake in Joy Air in September 2015, it reported that the airline had an asset-liability ratio of 110 percent and a net loss of CNY152 million (USD20.9 million) in 2014.

Most regional airline passengers are residents of small and mid-sized cities whose average incomes are about half that of their peers in first-tier cities, according to Lin Zhijie, a civil aviation expert. Despite this, the cost per mile of regional flights tends to be higher than on major routes.

To help lower fares and attract more travelers, local governments often subsidize regional airlines, Lin said. However, this reliance on subsidies creates significant uncertainty around their financial sustainability, he added.

According to Yicai’s findings, of China’s 46 passenger airlines, only Genghis Khan Airlines is dedicated to regional routes. Others, including Joy Air, have gradually adopted more popular routes between urban hubs. Several major airlines, such as industry leader China Southern, have already withdrawn from services between smaller cities.

Editors: Tang Shihua, Emmi Laine