By Lisa Barrington

SEOUL (Reuters) – Air travel demand from China is not back to pre-pandemic levels for Singapore Airlines, but a visa-free scheme for Chinese citizens to the Asian hub has helped fill seats and the airline will add more China capacity this year, its CEO said on Thursday.

Global aviation capacity returned to pre-pandemic levels this year, but recovery has been slower in Asia’s aviation industry due to still-sluggish international demand in China, the world’s second-largest economy.

“Travel into China has been strong, travel out of China has not yet recovered fully,” Singapore Airlines CEO Goh Choon Phong told media.

He said the visa-free scheme between China and Singapore which began in February has provided “some lift to load factors” for Chinese flights.

The airlines group was progressively restoring China capacity and would increase seats to Shanghai, Beijing and Guangzhou this year, Phong added.

The flag carrier suspended April flights to China’s Chengdu, Chongqing, and Xiamen, citing a lack of regulatory approvals. These are now in place and flights will operate until July, when permissions must be re-sought, Phong said.

Singapore Airlines posted a record annual profit for the second year in a row on Wednesday, raising its dividend.

However, the carrier’s net profit fell around 4.5% year-on-year for the March quarter, with profit growth sliding in the preceding two quarters.

The company also expects passenger yields — a measure of average fare paid per mile, per passenger — to continue to moderate as airlines expand capacity, and flagged geopolitical woes and supply chain pressure.

SIA’s shares were down 1.6% for the day at 13:30 pm (0430 GMT).

Singapore Airlines is set to take a 25.1% stake in Air India as a result of the Indian airline’s merger with Vistara, its joint venture with Singapore Airlines. Phong said he was hoping to hear about regulatory approvals this year.

The airline has a current fleet of 200 aircraft, which it expects to rise to 209 this fiscal year. Phong said Singapore Airlines still expects a delivery of the Boeing 777-9 – a model yet to be certified by U.S. regulators – next year.

(Writing by Lisa Barrington; Editing by Janane Venkatraman)

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