China Youth Travel Service said it will suspend new bookings with the airline and change currently booked itineraries that include the carrier to alternative firms, the state-run China Daily newspaper said, quoting a statement by the agency which was founded by the Youth League of the ruling Communist Party.
"Considering the fact that a succession of accidents have involved Malaysia Airlines recently, and that Chinese tourists have concerns over the carrier's safety record, we must fulfil our responsibility of ensuring the security of our fellow citizens," the statement said.
The Malaysia Airlines Boeing 777 vanished on March 8 with 239 people aboard, deviating inexplicably off its intended course between Kuala Lumpur and Beijing and flying thousands of kilometres in the wrong direction. Two-thirds of the passengers were from China.
Malaysia's Prime Minister Najib Razak said Monday that satellite data indicated the plane plunged into the sea in a region off western Australia, possibly after running out of fuel.
An intense, multinational operation for possible debris is ongoing, but the search was suspended Thursday due to bad weather.
Until now the flow of Chinese tourists to Malaysia has been accelerating -- hitting 1.8 million last year in a 15 percent annual increase -- making the Asian power the country's third-biggest source of visitors, behind only Singapore and Indonesia.
On Monday a Malaysia Airlines flight from Kuala Lumpur to Seoul diverted to Hong Kong due to electrical problems, the carrier said, adding to the company's publicity troubles.
"Now the biggest concern of our tourists to Southeast Asia is whether they will fly on Malaysia Airlines," the China Daily quoted a tour manager at a travel agency in the eastern province of Jiangsu as saying.
"Some consumers even are willing to pay more money to book other airlines rather than going with the cheaper tickets offered by Malaysia Airlines."
According to Chinese state media, Malaysia's image as a tourist destination has suffered as well as that of its flag carrier.
State-owned China International Travel Service has seen a sharp decrease in people registering for tours to the country, the China Daily quoted a publicity officer as saying.
And, an Internet survey by Sina.com, a leading Chinese news portal, found that 77.7 percent of 59,582 respondents said the missing plane incident would "affect their going to Malaysia for tourism".