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UPDATE 3-Australia's Qantas to suspend Shanghai flights on low demand

(Adds Australian tourism group comment in paragraphs 6-7)

May 14 (Reuters) - Qantas Airways said on Tuesday it will suspend flights to Shanghai starting on July 28, citing low demand, nine months after the Australian flag carrier resumed service from Sydney on hopes of a travel rebound following the pandemic.

International flight numbers to and from China are about 70% of pre-pandemic levels and have been slower to recover than in other markets because of fewer tourists and a domestic economic slowdown.

"Since COVID, the demand for travel between Australia and China has not recovered as strongly as expected. In some months, our flights to and from Shanghai have been operating around half-full," Qantas International CEO Cam Wallace said.

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Qantas aircraft on the Shanghai route will be redirected to other destinations across Asia with higher demand or new tourism opportunities, the company said.

Qantas will continue to monitor the Australia-China market closely and return to Shanghai when demand has recovered, the carrier added.

"Since borders reopened, Chinese visitors have been slow to return to Australia, despite aviation capacity increasing," said Margy Osmond, CEO of industry group Tourism & Transport Forum Australia.

She said arrivals from China, now the fourth-largest source of international visitors to Australia, were in March at just 47% of the pre-pandemic levels seen in March 2019. Before COVID-19, China was Australia's top tourism market.

Qantas still flies to Hong Kong from Sydney and Melbourne, and has partnerships with other airlines for onward travel within China.

The carrier announced a new route from Brisbane to Manila starting in late October, as well as additional flights to Singapore. It will also increase its flight frequency from Sydney to Bengaluru.

China's aviation regulator has said it expects international flights to return to 80% of pre-COVID levels by the end of 2024.

China's domestic flight capacity recovered faster, surging past 2019 levels in early 2023 soon after the country lifted travel restrictions.

U.S.-China flights have seen the slowest recovery but are increasing, with services at 16.5% of pre-pandemic levels, the International Air Transport Association said this month. (Reporting by Aaditya Govind Rao in Bengaluru and Lisa Barrington in Seoul; Editing by Sherry Jacob-Phillips, Gerry Doyle and Jamie Freed)