GF Securities: Passenger occupancy rates improved significantly year-on-year, and the airline industry's volume and price margins gradually improved

The Zhitong Finance App learned that GF Securities released a research report saying that the fuel surcharge reduction in August further reduced air travel costs for residents. The overall passenger flow growth rate during the summer season was obvious, and passenger occupancy rates and ticket prices improved year-on-year. Considering that demand for return trips and erroneous peak travel was still being released in mid-late August, it is expected that demand will remain resilient during and after the summer travel season. Demand for summer travel in 2026 is growing faster than the number of flights, driving the average passenger occupancy rate to increase compared to the same period in 2025. On the price side, ticket prices have rebounded steadily year over year, but there is still room for repair. Since August 5, fuel surcharges for domestic routes below 800 km (inclusive) and above 800 km have been reduced to 40 yuan and 70 yuan respectively, a decrease of 10 yuan and 30 yuan compared to the previous period, which will help reduce the overall travel costs for passengers. Considering that demand for return trips and false peak travel is still being released in mid-late August, it is expected that overall demand for the summer travel season will remain resilient, and the year-on-year improvement in passenger occupancy rates and ticket prices is expected to continue. On the supply side, the global aircraft supply chain continues to be tight, the pace of new aircraft delivery is slowing down, and the industry's medium- to long-term capacity supply constraint logic remains unchanged.

The main views of GF Securities are as follows:

Supply and demand in the entire industry changed from year-on-year decline to increase in July. Demand growth was faster than supply, and the year-on-year improvement in passenger occupancy rate increased

China's internal sector has clearly picked up, and the growth rate of international supply and demand has accelerated. According to the July major operating data announcements of the six listed airlines, the total supply and demand of the six listed airlines increased by 4.1% and 7.1%, respectively (Air China is combined with Biaoshan Air Caliber, same below), about 122.0% and 126.4% in the same period in 2019, respectively; passenger occupancy rates increased 2.4 percentage points to 86.1% year over year, up 3.0 percentage points from the same period in 2019. By route, domestic flight supply and demand increased by 3.6% and 6.4%, respectively, about 131.0% and 135.3% in the same period in 2019; the passenger occupancy rate increased 2.3 percentage points year over year to 87.2%, an increase of 2.8 percentage points over the same period in 2019. International supply and demand increased 5.9% and 9.4%, respectively; passenger occupancy rates increased 2.7 percentage points year over year to 83.3%, an increase of 2.9 percentage points over the same period in 2019. Regional line supply and demand decreased by 3.1%/0.8%, respectively, and the passenger occupancy rate increased 1.9 percentage points to 81.0% year over year.

The performance of airlines was divided in July. Demand for the three major airlines grew rapidly, and passenger occupancy rates of private airlines remained at a higher level

Passenger occupancy rates for spring and autumn continued to lead, and Air China and Jixiang improved significantly. According to the major operating data announcements of the three major airlines in July, the total supply and demand of the three major airlines increased 4.4% and 7.8%, respectively, and passenger occupancy rates increased 2.6 percentage points to 85.7% year on year; their international supply and demand increased 8.0% and 11.7% year on year, respectively, and passenger occupancy rates increased 2.8 percentage points year on year to 83.7% year on year. The total supply and demand of the three private airlines Chunqiu, Jixiang, and Hainan Airlines increased 2.8% and 4.5%, respectively, and passenger occupancy increased 1.4 percentage points to 87.6% year over year; international supply and demand fell 4.0% and 1.4% year on year, respectively, and passenger occupancy rate increased 2.2 percentage points year on year to 81.3% year on year. According to airlines, the total passenger occupancy rate of Spring Airlines increased 1.5 percentage points to 93.3% year on year, continuing to maintain the lead; Air China's total passenger occupancy rate increased 4.9 percentage points year over year to 85.0%, ranking first among the six airlines in terms of improvement. Its international passenger occupancy rate increased 6.1 percentage points to 83.9% year on year.

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