Recently, a number of listed airlines have disclosed their operating data for November 2023.
From the perspective of airlines, many airlines such as China Southern Airlines, China Eastern Airlines, and Air China have achieved a sharp year-on-year rebound in key indicators such as capacity investment and passenger turnover rate, but due to the off-season of the air passenger market in November, there is still a slight decline compared with the performance of major markets in October.
However, with the New Year's Day and Spring Festival holidays approaching, the agency believes that the future of the aviation industry may still exceed expectations.
Off-season transportation contraction
As we all know, every industry has a peak season, and the low season in the aviation industry starts in November every year.
According to the data of the Statistical Analysis Center of the Civil Aviation Administration of China and the Air Travel, the air passenger market entered the off-season in November 2023, and the performance of the main markets declined slightly. Among them, the total number of civil aviation passenger flights dropped to 3770,000 classes, with a daily average of 12,571 classes, down 64%, recovering to 95 in the same period of 20191%, the recovery level decreased by 4 from October7pct；The total number of civil aviation passengers was 464160,000 person-times, down 128%。
Feedback to the operation of major airlines. In terms of market demand, although the three major state-owned airlines, Air China (601111sh，00753.HK), China Eastern Airlines (600115sh，00670.HK), China Southern Airlines (600029sh，01055.HK) and Juneyao Airlines and Spring Airlines have seen a good recovery in passengers, with a significant increase compared to the same period last year.
However, from a month-on-month perspective, the decrease in demand in the off-season did bring many challenges, so that the passenger turnover rates of Air China, China Southern Airlines and Spring Airlines in November fell month-on-month. 58%。
On the supply side, compared with the market performance in October, all major airlines have shown signs of decline. In contrast, Air China and other airlines also doubled their passenger capacity investment year-on-year, mainly due to the low base in the same period last year.
In terms of overall passenger load factor, Air China, China Eastern Airlines, China Southern Airlines, Juneyao Airlines, and Spring Airlines collectively reached more than 70%, but compared with the level of passenger load factor in October, it generally declined.
Obviously, in the context of the traditional off-season of the aviation industry, the reduction in market demand is the fundamental reason for the month-on-month decline in the important operating indicators of major airlines. Some investors believe that the data in October is better, mainly driven by the "National Day Mid-Autumn Festival", and the month-on-month data may not truly reflect the prosperity of the industry, and it needs to be extended.
However, under the off-season window, there are still many airlines that choose to "expand" against the trend.
In terms of aircraft introduction, China Southern Airlines announced that in November, the group introduced one A350 aircraft and withdrew one A330-200 aircraft. As of the end of November 2023, the Group operated a total of 904 transport aircraft.
Air China also disclosed that in November, the group introduced a total of one ARJ21-700 aircraft. As of the end of November 2023, the Group operated a total of 900 aircraft, including 386 self-owned aircraft, 215 financial leases and 299 operating leases.
On the contrary, China Eastern Airlines did not introduce aircraft and withdrew 2 aircraft. As of the end of November, a total of 780 aircraft were in operation.
BOCI pointed out that it is an inherent law of the market that the air cargo market enters the off-season, and it is necessary to pay attention to the active response measures of major airlines in the off-season.
With demand picking up imminently, winter airlines are worth looking forward to
It is worth noting that with the New Year's Day and Spring Festival holidays approaching, people's enthusiasm for travel has been ignited again, and China's recent trial of unilateral visa-free policies for six Eurasian countries has led to the recovery of the aviation industry is increasing.
According to the data of "2024 New Year's Day Holiday Travel**" released by Tongcheng Travel, as of December 11, the popularity of travel during the New Year's Day holiday increased by 465% year-on-year, and the popularity of outbound travel increased by more than 5 times year-on-year.
The popularity of travel continues to heat up, and the number of air ticket bookings has also begun to skyrocket. **According to data from travel booking platforms, overall travel bookings for the New Year's Day holiday increased by 4 times year-on-year, of which air ticket bookings increased by 4 times year-on-year.
As of December 12, more than 1.2 million domestic air ticket bookings were made during the New Year's Day holiday, up nearly 45% from a week ago and about 23% from the same period last year, according to the data from Air Travel.
Under the doubling of demand, domestic flight tickets have been gradually, and some routes have been several times.
In terms of the international market, since December,China's trial of unilateral visa exemption for six Eurasian countries and the restoration of China-US routes have also added new highlights to the recovery of international routes.
With the recovery of outbound demand, the density of international flights is increasing. It is reported that since November 9, the regular direct passenger flights between China and the United States have increased again, and the winter and spring seasons are expected to increase from the current 48 flights per week to 70 flights per week, and the airlines of both sides will operate 35 flights per week. Many airlines, including Air China, China Eastern Airlines, China Southern Airlines, Hainan Airlines and Sichuan Airlines, have launched new direct flights between China and the United States.
In addition,China Southern Airlines plans to resume and add a number of new international routes from December to January. China Eastern Airlines also plans to resume direct flights from Shanghai to Cairo, Fukuoka, Dubai, Brisbane and other routes, and international and regional routes are expected to reach 80% of 2019 levels by the end of the year.
According to the latest 2023 civil aviation data summary report released by Flight Steward,According to estimates, China's civil aviation passenger traffic is expected to complete 6200 million person-times, an increase of 145 percent over 20229%, and the overall recovery to 93 in 20198%。
In terms of route types, the domestic market is recovering rapidly, and domestic routes are expected to complete passenger traffic of 5800 million person-times, an increase of 1 compared with 20195%；The recovery of international routes is relatively lagging behind, and it is expected to complete the passenger volume of 03.6 billion person-times, down 583% (recovery rate 41.)7%）。
With the growth of business volume, the performance of major airlines is expected to reach a higher level this year. It is important to know that the aviation industry has achieved a collective turnaround in the third quarter of this year (as shown in the chart below). Among them, China Southern Airlines, Air China and China Eastern Airlines made a profit of 41 in the third quarter9.5 billion yuan, 424.2 billion yuan, 364.2 billion yuan, outperforming other airlines.
The China Merchants Transportation Research Team believes thatAfter a year of rapid recovery in the domestic market in 2023, the repair of international lines is the main line of the industry in 2024. The recovery of international routes will help improve supply and demand in the domestic market and drive further profitability for airlines.
Everbright** said that the trial implementation of the visa-free policy for six Eurasian countries in December will help the resumption of international flight increasesIt is expected that by the end of next year, the supply and demand of overseas routes will fully recover, the profit structure of airlines will return to normal, and the profitability of airport companies will continue to recover.
Of course, in the future, on the basis of demand in line with expectations, if the sharp rise in oil prices and the sharp depreciation of the renminbi will also have an impact on the performance of airlines, the corresponding secondary market will also be volatile, investors need to be cautious and pay attention to the risks.
Text: Rainbow Bean