CICC: Recent aviation demand shows strong resilience, and the industry's awareness of "anti-involution" is gradually strengthening

According to the Zhitong Finance APP, China International Capital Corporation (CICC) released a research report stating that September marks the off-peak season for air travel, with airlines grounding more aircraft awaiting maintenance or proactively reducing flight volumes. However, travel volume continues to grow at a relatively fast year-on-year rate, leading to a tighter supply-demand structure in the off-peak season and consequently driving up ticket prices. Since the "Eleventh" holiday, domestic ticket prices have generally maintained year-on-year growth, reversing the decline in domestic ticket prices seen in the first three quarters. This is mainly due to the continuously improving domestic supply-demand structure, and the trend of rising ticket prices shows strong sustainability. However, the summer travel ticket prices did not meet expectations, prompting the entire industry to adjust its strategies to respond to market changes and strengthen revenue management. Meanwhile, the three major airlines also exhibit strong interactivity, avoiding excessive price competition across the industry.

CICC's main viewpoints are as follows:

Domestic public and business passenger volume continues to grow, driving price increases while replenishing capacity

Domestic public and business passenger volume bottomed out in June and has gradually rebounded, maintaining a growth trend month-on-month (the absolute volume of public and business passengers still decreased year-on-year). The increase in public and business passenger volume has further boosted overall industry demand and raised ticket price levels (public and business passengers are relatively insensitive to price and have a higher proportion of choosing premium cabins).

Supply compression after the summer travel season, but air travel demand shows strong resilience, optimizing the off-peak supply-demand structure

September enters the off-peak season for air travel, with airlines grounding more aircraft awaiting maintenance or proactively reducing flight volumes, while travel volume continues to grow at a relatively fast year-on-year rate, leading to a tighter supply-demand structure in the off-peak season and consequently driving up ticket prices.

Under industry self-discipline and "anti-involution," airlines proactively avoid excessive price competition

Summer travel ticket prices did not meet expectations, prompting the entire industry to adjust its strategies to respond to market changes and strengthen revenue management. Meanwhile, the three major airlines also exhibit strong interactivity, avoiding excessive price competition across the industry. In summary, air travel demand remains resilient in the off-peak season, especially as public and business passengers gradually recover, while off-peak air supply is limited, optimizing the supply-demand structure across the industry. Additionally, the awareness of "anti-involution" within the industry is gradually strengthening, and revenue management levels are being optimized. These factors are the result of accumulated market behavior over a longer period, contributing to strong sustainability.

The industry supply-demand structure may continue to optimize in the coming years

CICC expects that from 2026 to 2028, the industry's supply (ASK) will grow at an average annual rate of 3%. With the growth of the travel population and economic recovery, air travel demand (RPK) is expected to maintain a growth rate of over 5%.

Target recommendations

For H-shares, the top pick is China Eastern Airlines (00670), while for A-shares, recommendations include China Express (002928.SZ), Juneyao Airlines (603885.SH), and Spring Airlines (601021.SH).

Risk factors

Economic growth is below expectations; aircraft manufacturers accelerate production capacity; significant rise in oil prices; substantial depreciation of the RMB; fluctuating tariff policies