Could Qantas shares be poised to catch some Chinese tailwinds?

Qantas shareholders will be watching Australia's latest diplomatic developments with China.

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Qantas Airways Ltd (ASX: QAN) shares are marching higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) airline stock closed yesterday trading for $6.00. In early afternoon trade on Tuesday, shares are changing hands for $6.06 apiece, up 0.9%.

That's right about in line with the 1.0% gains posted by the ASX 200 at this same time.

And it sees Qantas shares up more than 13% so far in 2024.

That's the latest price action for you.

Now here's why Qantas shares could catch some sustainable updrafts from China.

Qantas shares eyeing panda diplomacy

In a boost for Qantas shares, 2024 has seen domestic air travel within Australia rebound to just about pre-COVID levels.

"After four years of instability, the domestic airline industry has returned to more typical seasonal levels that were last seen before the pandemic," ACCC commissioner Anna Brakey noted last month.

International air travel has also surged since borders reopened post-pandemic. However, international numbers remain below 2019 figures.

That's particularly true for China.

As The Australian reported, Chinese travellers counted as Australia's biggest international tourist group, bringing in $3.3 billion that year. But in April this year short-term visitors from China still only represented 60% of pre-pandemic numbers.

However, thawing relations between the two nations could see those numbers tick back up, offering a potential boost for Qantas shares.

In a move likely to be welcomed by international travellers heading in both directions, China is adding Aussies to the list of citizens who can travel there without visas for trips of up to 15 days. That eliminates the $110 tourist visa Australians are required to pay currently to travel to the Middle Kingdom.

After meeting with Prime Minister Anthony Albanese, Chinese Premier Li Qiang said that in addition to the visa-free pass for Aussie travellers, Australia would offer "reciprocal access to five-year multiple entry visas for tourism, business and visiting family members."

Commenting on the visa travel exemption that could provide tailwinds for Qantas shares, Sydney Airport CEO Scott Charlton said (quoted by The Australian):

In terms of inbound visitors from China, at the end of March this year we were just over 80% recovered, and today's announcement represents a good first step in continuing to backfill that gap.

Last month Qantas announced it was suspending its Sydney-Shanghai flights commencing on 28 July "due to low demand".

"Qantas will continue to monitor the Australia-China market closely and will look to return to Shanghai when demand has recovered," the ASX 200 airline stated.

With the lifting of visa requirements for Aussie travellers and Australia's reciprocal measures for Chinese travellers, demand may recover sooner than expected, potentially lifting the medium-term performance of Qantas shares.

According to Australian Airports Association CEO James Goodwin:

It's hoped the renewed focus on trade and tourism between the two countries will see an increase in airline capacity. More airline seats available between Australia and China will mean more passengers through our terminals and out exploring our cities and regional areas as tourists.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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