Chinese airlines and travel agents have been exploring various ways to make up for lost business with Japan.
Tens of thousands of Chinese residents have been canceling their travel plans to Japan over the past three weeks after Japan's "purchase" of the Diaoyu Islands.
Chinese airlines said the number of passengers flying between China and Japan fell to a record low during the recent week-long National Day holiday, which usually is one of their best sales periods.
As a result, airlines have been reducing the frequency of some flights, canceling charters, and using smaller aircraft on some routes.
China Eastern Airlines Co Ltd, which has a quarter share of the China-Japan flight market, said it has now postponed its planned new route between Shanghai and Sendai, which was due to start on October 18, because of lack of bookings.
Air China Ltd, which operates 20 routes between the two countries, said it had cancelled 36 flights and used smaller aircraft on 34 flights, between September 20 and Sunday.
However, experts said the loss of the Japan business should not have a profound effect on the two companies' overall business performance.
Li Xiaojin, a professor at China Aviation University in Tianjin, estimated that the two main carriers usually generate 3 to 4 percent of their total profits from the route.
But he expected increases in business on other routes, particularly between China, South Korea and Southeast Asia, as well as domestic routes, which should compensate for the shortfall.
"An increase in domestic traffic, which has been strong during the period, will help fill up any lost capacity," Li said.
He noted that China Eastern launched three new domestic routes in September to Xi'an, Kunming and Fuzhou, and others are planned to similar second-tier city destinations.
Air China also said in its interim report that investment into additional routes to Japan will be reduced in favor of other markets and domestic routes.
The downturn in traffic has also prompted significant numbers of Japanese travelers to cancel their plans to China.
Japan is currently the second-largest source of China's inbound tourism.
Statistics from the National Tourism Administration show that 1,878,200 Japanese visited China in the first six months of 2012, about a quarter of whom were on business trips.
"We did not receive one Japanese tourism group last week," said a marketing representative from BTG International Travel & Tours, which normally expects to book two or three Japanese groups a month.
Other local travel agencies told China Daily that their Japanese tour group business has been affected by the tension, although the exact number of cancellations is still hard to estimate.
As with the carriers, the travel agencies said they are looking at ways to make up for the lost business, and more business is now expected to come from South Korea, Russia and the United States.