GF Securities: The year-on-year growth rate of supply and demand in the aviation industry expanded in November, and the medium- to long-term recovery trend did not change

The Zhitong Finance App learned that GF Securities released a research report saying that the year-on-year growth rate of supply and demand in the aviation industry expanded in November, the off-season was not weak, and the passenger occupancy rate increased year on year. The increase in internal flights in China continued to increase, and international flights overall exceeded the 2019 level. The performance of the major airlines was divided. Fare prices increased 3.4% year on year in November, and demand is resilient. Despite short-term pressure on demand for international routes between China and Japan, the medium- to long-term recovery trend has not changed. Combined with flexible ticket prices, HNA Holdings (600221.SH) and China Airlines (002928.SZ) are preferred.

The main views of GF Securities are as follows:

The year-on-year growth rate of supply and demand in the entire industry expanded in November. The off-season was not weak, and the passenger occupancy rate increased year-on-year. The increase in China's internal flights continued to increase, and the overall international flight rate exceeded the 2019 level

According to the major operating data announcements of the six listed airlines in November, the total supply and demand of the six listed airlines each increased by 7.1%/10.3% year on year (Air China data is combined with the Biaoshan Air Caliber, same below), about 110.4%/116.7% for the same period in '19; the passenger occupancy rate increased 2.5 percentage points to 85.6% year on year, up 4.6 percentage points from the same period in '19. By route: Domestic flight supply and demand each increased 4.2%/6.8% year on year, about 113.3%/118.2% in the same period in '19; the passenger occupancy rate increased 2.1 percentage points year on year to 86.6%, up 3.6 percentage points from the same period in '19. International supply and demand increased 15.0%/20.7% year on year, about 104.8%/113.5% in the same period in '19; passenger occupancy rate rose 3.9 percentage points to 83.4% year on year, up 6.4 percentage points from the same period in '19. Regional line supply and demand each increased -2.2%/2.6% year on year; passenger occupancy rate increased 3.7 percentage points year over year to 80.4%, an increase of 7.4 percentage points over the same period in '19.

Airlines' performance was divided, with Chunqiu and China Eastern Airlines leading the passenger seat ratio, and Air China leading the improvement in November

According to the main operating data announcement of the three major airlines in November, the supply and demand of the three major airlines each increased 6.7%/10.3% year-on-year in November, continuing the pace of restoration. China's internal supply and demand recovered to 111.6%/116.6% respectively in the same period in 2019. China Eastern Airlines led the passenger seat ratio, rising 3.0 percentage points to 87.4% year on year in November, an improvement of 7.3 percentage points over 2019; Air China recovered the fastest, rising 3.9 percentage points to 83.3% year on year in November. According to the main operating data of private airlines in November, the total supply and demand of Chunqiu, Jixiang, and Hainan Airlines each increased by 8.6%/10.6% year on year. The total supply and demand growth rate for domestic flights in China was 5.1%/6.8% year on year, and the total supply and demand growth rate for international flights reached 21.4%/26.2% year on year, respectively. According to airline divisions, Spring Airlines led the passenger occupancy rate, up 1.9 percentage points from the previous year to 92.3%. Juneyao Airlines changed -0.5%/+0.8% year-on-year due to slow engine maintenance and limited aircraft utilization.

External events continue to disrupt, and demand for China-Japan routes is sluggish in the short term, but the medium- to long-term recovery trend of airline international routes has not changed

Recently, the policy side has further extended the impact cycle. The three major airlines have successively issued announcements extending the free refund and change policy for China-Japan routes from December 31, 2025 to March 28, 2026 (inclusive). According to the latest monitoring by flight manager DAST, the number of flights from mainland China to Japan dropped to 1006 in the 49th week (12.01 to 12.07), setting a new phased low; at the same time, the cancellation rate of flights between China and Japan is expected to reach 30.4% in December, and the supply side also shrinks markedly. Structurally, although the number of flights to Japan, South Korea, and Hong Kong still ranked in the top three in the TOP20 navigable countries/regions in November, the number of flights to Japan has fallen back to 82.0% in 2019. Fares increased 3.4% year on year in November, and demand was resilient. Despite short-term pressure on international routes between China and Japan, the medium- to long-term recovery trend did not change. Combined, price flexibility was evident. HNA Holdings and China Airlines were preferred, and China Airlines were preferred, focusing on Air China, Juneyao Airlines, and Spring Airlines.

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