Cinda Securities: Airlines' passenger load factor remains high, ticket prices continue to recover; optimistic about travel recovery in the fourth quarter

According to the Zhitong Finance APP, Xinda Securities released a research report stating that the growth rate of domestic airline capacity is low, with a focus on increasing investment in international routes. The net growth rate of airline fleets is basically below 3%, resulting in relatively tight supply. The passenger load factor remains high, with improvements compared to the same period last year and 2019, particularly notable in domestic routes. In terms of turnover, domestic route turnover has steadily increased year-on-year, while international route turnover has significantly grown, basically recovering to the level of the same period in 2019. On the pricing side, the industry’s fuel-adjusted ticket prices turned positive year-on-year during the National Day and Mid-Autumn Festival holiday, and ticket prices continued to recover in early October, with demand remaining relatively strong. The fourth quarter enters a low season mainly for business travel, and with last year's low base, there may be significant year-on-year improvements, driving continuous recovery in airlines' unit revenue.

Xinda Securities' main points are as follows:

Since early 2025, the industry's passenger load factor has remained high

In terms of supply and demand, the growth rate of domestic airline capacity is low, with a focus on increasing investment in international routes. The net growth rate of airline fleets is basically below 3%, resulting in relatively tight supply. The passenger load factor remains high, with improvements compared to the same period last year and 2019, particularly notable in domestic routes. In terms of turnover, domestic route turnover has steadily increased year-on-year, while international route turnover has significantly grown, basically recovering to the level of the same period in 2019.

On the pricing side, the industry’s fuel-adjusted ticket prices turned positive year-on-year during the National Day and Mid-Autumn Festival holiday, and ticket prices continued to recover in early October, with demand remaining relatively strong. The fourth quarter enters a low season mainly for business travel, and with last year's low base, there may be significant year-on-year improvements, driving continuous recovery in airlines' unit revenue. The industry’s passenger load factor remains high, with strong travel demand for both domestic and international routes, and recent ticket prices have achieved continuous recovery, which may significantly restore airlines' unit revenue.

At the same time, with the implementation of "anti-involution" measures and the "Convention," the phenomenon of malicious low pricing in the industry is expected to diminish, which may help ticket prices recover and further boost airlines' unit revenue. Coupled with the cost reduction brought about by falling oil prices, airline profitability may further increase. We are optimistic about the profit recovery elasticity brought by the rebound in airlines' unit revenue.

High passenger load factor, recent ticket prices continue to recover

Supply and demand: High passenger load factor, slowing growth rate of domestic route turnover. According to the latest industry data released by the Civil Aviation Administration, in August 2025, the industry’s ASK and RPK increased by 5.1% and 5.8% year-on-year, respectively, compared to 24.1% and 25.4% in the same period of 2019, with the corresponding passenger load factor reaching 87.5%, an increase of 0.6 percentage points year-on-year and 0.9 percentage points compared to the same period in 2019. By region, domestic route turnover increased by 3.5% year-on-year, while international and regional routes have recovered to 100.4% of the 2019 level.

Ticket prices: Fuel-adjusted ticket prices turned positive during the National Day holiday, and ticket prices continued to recover in early October. From the beginning of 2025 to now (as of October 15), the average domestic ticket price is 861 yuan, a year-on-year decrease of 7.9%. During the National Day and Mid-Autumn Festival holiday (including the day before the holiday), the average ticket price for domestic routes, including fuel, is 942 yuan, a year-on-year decrease of 1.5%, with the fuel-adjusted ticket price estimated to be +1.2%, achieving a positive turnaround. In the first half of October (up to October 15), the industry’s average ticket price increased by 2.2% year-on-year, with ticket prices remaining strong and continuing to show a year-on-year recovery. In the past four weeks (September 15-21, September 22-28, September 29-October 5, October 6-12), the weekly average ticket prices increased by 3.4%, decreased by 3.0%, decreased by 1.0%, and increased by 3.4% year-on-year, respectively In the latest seven days (10.9-10.15), the average domestic ticket price increased by 4.9% year-on-year.

Oil Exchange Rate: The average price of aviation fuel in October decreased by 0.1% year-on-year, and the RMB exchange rate strengthened. In terms of oil prices, the average ex-factory price of aviation kerosene for Q1, Q2, and Q3 of 2025 was 5952, 5385, and 5533 yuan/ton respectively, which is -10.0%, -17.0%, and -11.2% compared to the average price in the same period of 2024, and +25.1%, +6.2%, and +13.3% compared to the average price in the same period of 2019. The domestic aviation fuel ex-factory price including tax in October was 5572 yuan/ton, a year-on-year decrease of 0.1%. In terms of exchange rates, the RMB has appreciated since the beginning of 2025. At the end of 2024, the central parity exchange rate of the US dollar to RMB was 7.1884 yuan. As of October 16, 2025, the central parity exchange rate of the US dollar to RMB was 7.0968 yuan, a decrease of 1.27% compared to the end of 2024 and -0.12% compared to the end of Q3 2025, with the RMB continuously appreciating since April.

Airlines continue to increase investment in international route capacity, with high domestic and international passenger load factors.

Operational situation: In terms of domestic routes, from January to September 2025, except for Air China and Juneyao Airlines, which saw a year-on-year decrease in domestic route capacity, other airlines experienced slight growth in domestic route capacity year-on-year, with Spring Airlines showing a growth rate of +6.4%, while other airlines had growth rates below 2%; the passenger load factor remained high, with significant year-on-year increases in the domestic load factors of the three major airlines, among which China Eastern Airlines' load factor increased by 3.4 percentage points year-on-year, exceeding the 3.5 percentage points of the same period in 2019; except for Juneyao Airlines, all airlines saw year-on-year growth in domestic turnover, with Spring Airlines and China Eastern Airlines achieving growth rates of 6.4% and 6.1% respectively, while other airlines' growth rates were all within 5%. In terms of international routes, both China Eastern Airlines and Juneyao Airlines exceeded the turnover levels of the same period in 2019, while China Southern Airlines and Spring Airlines' recovery rates were close to those of 2019, and Air China and Hainan Airlines still had a significant gap in turnover recovery.

Fleet Introduction: Air China had the highest net increase in aircraft in September.

In September, Air China introduced 7 passenger aircraft, with a net increase of 5 aircraft, the highest net increase among the six major airlines. China Southern Airlines introduced 7 aircraft with a net increase of 4, and China Eastern Airlines introduced 4 aircraft with a net increase of 2; Hainan Airlines introduced 1 aircraft with no net increase; Spring Airlines and Juneyao Airlines did not introduce or retire any aircraft. Cumulatively from January to September, China Southern Airlines, China Eastern Airlines, and Air China had net increases of 37, 16, and 16 passenger aircraft respectively, while Spring Airlines, Juneyao Airlines, and Hainan Airlines had net increases of 5, 3, and 6 passenger aircraft respectively.

Target Aspects

It is recommended to focus on China Southern Airlines (600029.SH), China Eastern Airlines (600115.SH), Air China (601111.SH), Spring Airlines (601021.SH), and Juneyao Airlines (603885.SH).

Risk Factors

Travel demand growth may be lower than expected, ticket price increases may be less than expected, industry supply may exceed expectations, market competition may intensify, risks of significant oil price increases, and risks of significant RMB depreciation