Societe Generale Securities: Supply and demand support the upward trend in the aviation industry to reach a critical point of elasticity
The Zhitong Finance App learned that Societe Generale Securities released a research report saying that looking ahead to 2026, the tight balance between supply and demand in the aviation industry is expected to continue, and high passenger occupancy rates are expected to be effectively transmitted to ticket prices. Combined with positive factors such as declining oil prices and policy support, airlines will officially enter an upward profit cycle, and ticket price flexibility during peak season is worth looking forward to. The bank believes that multiple benefits in the future are expected to drive a “sharp rise in volume and price” in domestic and international aviation demand.
Societe Generale Securities's main views are as follows:
Industry sentiment bottomed out and rebounded, reaching a critical point in the upward cycle
After a continuous recovery in supply and demand in 2023-2024, the aviation industry is already at an important turning point in the boom cycle. Domestic air ticket prices changed from decline to rise in the second half of the year, international routes continued to increase, and overall market sentiment rebounded markedly, laying the foundation for the industry to rise.
The supply side is limited, and the capacity growth rate remains low
Trade frictions have led to slow delivery of Boeing aircraft to Chinese airlines. At the same time, powder metallurgy defects in Pratt & Whitney's PW1100g engine caused the Airbus A320neo fleet to stop maintenance, and effective capacity deployment is being squeezed. The supply side of the aviation industry is expected to continue to maintain a tight balance.
Strong demand-side resilience, outstanding performance on international routes
Overall travel demand remains resilient, and the number of domestic passengers is growing steadily. The implementation of multi-batch visa-free policies and the gradual recovery of the global economy will jointly drive a cumulative year-on-year increase of 23.2% in the number of international passengers from January to October 2025, becoming the core engine driving demand growth.
Cost-side improvements combined with favorable policies are expected to increase profitability
The international oil price center is expected to decline, providing solid cost support for airlines. Furthermore, the Civil Aviation Administration's clear statement to “rectify internal competition” and the promulgation of the “Air Passenger Transport Self-Regulatory Convention” are expected to curb malicious low price competition and promote the return of ticket price revenue to a reasonable level.
Multiple favorable support in the medium to long term, driving a “sharp rise in volume and price”
The continued deepening of policies to promote inbound tourism, the promotion of action plans for the integrated development of culture and tourism and the civil aviation industry, and the substantial implementation of pilot policies for spring and autumn vacations in many parts of the country are expected to further stimulate tourism consumption potential, fill the bottom of the traditional off-season, and thus drive a “sharp rise in volume and price” in domestic and international aviation demand.
Risk warning: 1) Exchange rates fluctuate greatly. 2) Oil prices fluctuate greatly. 3) Macroeconomic growth has stalled. 4) Uncertain events such as air crashes, terrorist attacks, wars, and disease outbreaks.