China Merchants Securities: The growth rate of air cargo has improved, and passenger transport profits are expected to be under pressure year-on-year

The Zhitong Finance App learned that China Merchants Securities released a research report saying that the passenger traffic growth rate has improved since July. In the first 4 weeks (2026/6/26-2026/7/23), the domestic airline revenue side is still under pressure. International and regional passenger flow is +1.6% year over year, and passenger demand side performance is relatively weak; in terms of freight, the average value of the TAC Shanghai outbound air transport price index was +23.8% year over year in July. The passenger transport sector is affected by high fuel costs and relatively weak demand. Profits are expected to be under year-on-year pressure. The current market value of the sector has declined sharply, waiting for demand and cost improvements to catalyze. The freight sector benefits from increased export demand, tight industry supply, air freight rates remain high, and operating profits are expected to continue to grow under high oil prices.

The main views of China Merchants Securities are as follows:

Core air passenger traffic data for June

1) Demand, the passenger turnover of civil aviation in June 2026 was 107.4 billion people kilometers, +13.0% year on year 19, -2.1% year on year 25; passenger turnover on domestic routes in China (excluding regions) was 79.1 billion people kilometers, +18.3% year on year 19, and -5.2% year on year 25; passenger turnover on international and regional routes was 28.3 billion people kilometers, +0.3% year on year 19, and +2.6% year on year 25.

2) Supply. In June 2026, the number of seats available for civil aviation was 126.8 billion people kilometers, +11.1% year on year 19, -2.2% year on year 25; passenger occupancy rate of civil aviation was 84.7%, +1.4pct year on year 19, +0.1 pct year on year 25; daily aircraft utilization rate reached 8.2 hours, -7.9% year on year 25.

3) Listed airline performance, the year-on-year changes in RPK for China Southern Airlines/Air China/China Airlines/Hainan Airlines/Spring and Qiuxiang domestic routes in June were -5.5%/-6.7%/-7.1%/-8.3%/+20.3%/+3.4%, respectively, and the year-on-year changes in ASK for China Southern Airlines/Air China/China Eastern Airlines/Hainan Airlines/Chunqiu/Jixiang domestic routes were -4.0%/-7.7%/-5.6%/-6.8%/+21.5%/+4.6%; China Southern Airlines/China Eastern Airlines/Hainan Airlines/China Airlines/Hainan Airlines/Chunqiu/Jixiang International Airlines The year-on-year changes in RPK were +7.2%/+7.4%/ +4.7%/-5.2%/-4.8%/-5.4%. The year-on-year changes in China Southern Airlines/Air China/China Eastern Airlines/Hainan Airlines/Chunqiu/Jixiang International routes were +7.8%/-1.6%/-0.3%/-7.4%/-7.3%/-9.3%, respectively.

Air cargo core data for June

1) Cargo and mail traffic volume, in June 2026, the international and regional cargo and mail traffic volume of civil aviation was 425,000 tons, -0.7% month-on-month, +11.0%; civil aviation international and regional cargo and mail turnover was 3.11 billion tons/km, -0.3% month-on-month and +13.5% year-on-year. 2) Freight rate. In June 2026, the TAC Shanghai outbound air freight price index averaged 6072 points, +2.2% month-on-month and +35.7% year-on-year.

The increase in aviation fuel prices is expected to be basically stable in August

Benefiting from the easing of the situation in the Middle East in June, national crude oil prices and aviation fuel prices both fell sharply. The year-on-year increase in domestic aviation kerosene factory prices fell back to 46% on July 1. Since July, due to the twists and turns in the situation in the Middle East, international aviation fuel prices have rebounded again. It is expected that the increase in domestic aviation kerosene factory prices will remain above 40% in August, and is basically stable from month to month.

Risk warning: macroeconomic downturn, sharp devaluation of RMB, sharp rise in oil prices, major natural disasters, etc., production safety accidents.