2023 is the fourth consecutive year of losses for China's civil aviation.
In the three years of the epidemic, the cumulative loss of the civil aviation industry has exceeded 400 billion, and although the loss will be greatly reduced in 2023, it will still not be able to turn losses into profits, with a loss of 28.8 billion yuan in the whole industry, of which 17 billion will be lost by airlines.
The number of civil aviation passengers, especially international passengers, has not yet recovered to pre-pandemic levels, which is one of the important reasons why airlines have not been able to turn around their losses. By the end of 2023, international flight volumes will only recover to 55 of the pre-pandemic level of 20198%, a large number of wide-body aircraft that were originally going to fly international flights were forced to return to the domestic market to grab the market, which further affected the revenue of the domestic market.
However, from the perspective of aircraft introduction, by the end of 2023, the number of aircraft in China's civil aviation will reach 4,200, an increase of 35 aircraft from 2022 and 382 aircraft from 2019, but the passenger volume in 2023 has not yet recovered to the level of 2019.
In the analysis of the market in the past two years, there is almost no need to consider the problem of supply, the supply must be excessive, and the growth of supply must be slow. Tang Chao, a person in the civil aviation industry, pointed out to reporters.
Introduce while lying on the nest.
The new crown epidemic that began in 2020 has had a huge impact on the civil aviation industry. In January of that year, the number of flights and the load factor began to decline sharply, and there was even a rare situation of zero passengers on a flight to Sanya.
This was followed by a large number of domestic flight cancellations, as airlines found that they were losing more and more money. By the end of February, the Chinese market had hit a low point, with nearly 90% of flights being cancelled.
As countries have closed their borders, international flights have also begun to fall off a cliff. By April 2020, the Civil Aviation Administration of China began to introduce the "Five Ones" policy of reducing international passenger flights in accordance with the work deployment of the joint prevention and control mechanism: each airline can only operate a route to any one country in Chinese mainland, and can only reserve one, and each route shall not operate more than one flight per week.
According to the Civil Aviation Statistical Bulletin, the passenger traffic in the whole of 2020 was only 4200 million passengers, down 367%, the first annual decline in passenger traffic since 1989. Among them, the domestic route completed 40.8 billion person-times, down 303%, Hong Kong, Macao and Taiwan routes completed 96130,000 passengers, down 91 from 20193%；The number of passengers transported on international routes was 956510,000 passengers, down 87 from 20191%。
2020 was not the lowest point in passenger volume, although there was an increase in passenger traffic in 2021, it fell sharply in 2022, and the annual passenger volume was only 2500 million passengers, less than the number of passengers ten years ago. (In 2012, the passenger traffic volume was completed 3.)200 million people).
The rapid decline in flight and passenger traffic has caused a large number of aircraft to be forced to lie on their stomachs, such as Hainan Airlines, which revealed that at one point 96 planes were grounded for a long time. The industry's aircraft utilization rate also bottomed out in 2022, falling from more than 9 hours before the pandemic to just 435 hours.
At the end of 2019, the number of passenger aircraft in China's civil aviation increased to 3,645, 3,717 in 2020, 3,856 in 2021, 3,942 in 2022, and 4,013 in 2023.
This is not unrelated to the time lag between aircraft ordering and delivery. After the airline signs the aircraft order, a future delivery date is determined, and if the airline does not want to take delivery of the aircraft within the delivery period agreed in the contract, it needs to communicate with the aircraft manufacturer to see if it can postpone the delivery, and the manufacturer will also agree to delay the delivery of some aircraft in view of the long-term cooperation, but it cannot be postponed indefinitely.
The extreme imbalance between supply and demand has brought about a direct result of the industry's huge losses for three consecutive years: a loss of 974 in 20203.2 billion, with a loss of 842 in 2021500 million, with a loss of 2174 in 2022400 million. Three years to lose the money earned in the past ten years.
Entering 2023, with the relaxation of epidemic control, the planes in the nest have also returned to the blue sky one after another, and the number of domestic flights and passengers has also quickly exceeded the epidemic period.
However, the resumption of international flights has been slower than expected. According to the statistics of flight stewards, the overall recovery of civil aviation international passenger flights in 2023 will only be 37 of those in 20195%, from less than 10% at the beginning of the year to 55% at the end of the year8%。
The "double day" pattern of domestic routes and international routes has also made the overall passenger traffic in 2023 not exceed the pre-epidemic level, only recovering to 93% of 20199%。
However, the number of passenger aircraft at the end of 2023 reached 4,013, 368 more than in 2019, an increase of more than 10%. The recovery of capacity has been faster than the recovery of passenger volumes, and airlines have not been able to return to pre-pandemic levels in terms of daily aircraft utilization and load factor: the average daily aircraft utilization rate of domestic airlines in 2023 is 81 hour, 1 less than in 20192 hours, the average load factor is 779%, 5 percentage points lower than in 2019.
To see whether there is excess capacity, the core indicators are the daily utilization rate and passenger load factor of the aircraft, the daily utilization rate of the aircraft represents the recovery rate of production capacity, and the passenger load factor represents the recovery rate of the market. Lin Zhijie, a civil aviation industry insider, pointed out to the first financial reporter that he believes that if the daily utilization rate is 0 lower than in 2019If the load factor is 5 percentage points lower than 5 hours or more, it is still overcapacity.
Pre-pandemic growth has slowed.
While the overcapacity in 2023 is closely linked to the slow recovery of international markets and the continued delivery of new aircraft, a look at passenger volume and capacity growth over the past decade shows that China's civil aviation has slowed from double-digit growth to single-digit growth before the pandemic.
The reporter consulted the data of the Civil Aviation Statistical Bulletin since 2013 and found that before 2019, both the annual growth of passenger volume and the annual growth of capacity were more than 10%, such as the average annual growth rate of passenger traffic in the five years from 2013 to 2017 was 115%, and the year-on-year increase in passenger volume in 2017 reached 13%, and in 2018, it increased by 10% year-on-year compared to 2017. The annual growth rate of capacity in the past five years has also been basically the same as the growth rate of passenger traffic.
But since 2019, passenger growth has slipped to single digits, up 79%, compared to the year-on-year increase in capacity for the year, which was even less, at 49%。
In this regard, Lin Zhijie analyzed that the single-digit growth of passengers in 2019 is due to market reasons, but more is still insufficient capacity, and the capacity growth in 2019 is much smaller than the growth of passenger volume, which is related to the global grounding of Boeing 737MAX because of two foreign crashes, which is equivalent to reducing the introduction of 250 aircraft. At that time, Chinese airlines grounded a total of 97 737 MAX aircraft, and new 737 MAX aircraft deliveries were suspended at the same time.
The increase in capacity is much smaller than the increase in passenger volume, which also makes China's civil aviation still earn 541 in 2019300 million yuan, an increase of 57 over 2018600 million yuan.
However, a number of industry insiders pointed out to the first financial reporter that it is no accident that the passenger growth in 2019 has slowed to single digits, and China's civil aviation has gone through a stage of rapid growth.
According to historical experience, there is a dynamic change and stable elasticity coefficient between the growth rate of civil aviation passenger traffic and the GDP growth rate, which is the potential growth rate of the civil aviation market. We have counted the data of China's civil aviation passenger traffic and GDP growth rate since 1978, and the data show that the elasticity coefficient between the two has shown a phased downward trend, and has experienced two stages: ultra-high speed and high speed growth. Since 2019, it has entered a new stage of medium-speed growth, and the elasticity coefficient has remained at about 13∶1。Tang Chao told reporters that China's economic growth will be about 5% in 2023, while domestic civil aviation passenger traffic will only increase by 1 compared with 20195%, far from reaching the potential growth level of China's civil aviation market.
The report of Qunar Research Institute also has the same view: before 2019, the growth rate of passenger volume in the domestic civil aviation market was almost twice the GDP growth rate, but after the epidemic, this influence is gradually weakening, and from the situation in the third quarter of 2023, the domestic civil aviation passenger volume compared with the recovery rate in 2019 no longer maintains a two-fold growth rate of GDP, but gradually approaches one to one.
For the already arrived 2024, Song Zhiyong, director of the Civil Aviation Administration, predicted at the 2024 Civil Aviation Work Conference that transportation production in 2024 will return to natural growth. It is expected that the annual passenger traffic of domestic routes will reach 6300 million people, more than 77 percentage points, coupled with China's foreign visa exemption and the introduction of a series of entry and exit facilitation policies and measures, the international passenger transport market will accelerate its recovery, and it is expected to reach about 6,000 flights per week by the end of 2024, recovering to about 80% of the pre-epidemic level.
However, many industries are still not optimistic about the market. According to the reporter's understanding, the general manager of a domestic airline predicted at his internal annual work meeting that the industry will increase by 150 aircraft in 2024, and the recovery of capacity compared with 2019 will still be greater than the recovery rate of passengers, and the industry competition will be more intense; From the demand side, the momentum of consumption recovery is less than expected, and multiple factors such as consumption downgrade and high-speed rail diversion, the contradiction between supply and demand gap and lack of market stamina will continue to coexist.
Zou Jianjun, a professor at the Civil Aviation Management College of China, also believes that the air transport market in 2024 may not be too optimistic, and the first quarter may be better than 2023, but the third quarter (the concentrated release of pent-up demand in the summer of 2023) may be "unsatisfactory", and "climbing over the hurdles" will be a true portrayal of the industry throughout the year.
The growth target set by the Civil Aviation Working Committee for 2024 will be 136 billion ton-kilometers of total transportation turnover, passenger traffic and cargo and mail transportation volume will reach 6900 million passengers and 7.6 million tons, compared to 2023, the annual growth rate must be reached separately. 3% and 33%, compared with 2019, it requires separate growth. 5% and 09%。Although the growth rate is not large compared to the pre-pandemic period, considering the current development environment of the global economy and the aviation industry, the challenge of achieving the goal is still very large. Zou Jianjun further pointed out.
What to do in the future.
At present, the market has a stage of excess capacity and a slowdown in demand, so the industry needs to control the growth of capacity to match the demand of the market and avoid the continued overcapacity," Lin Zhijie suggested, "The second is to increase the flexible allocation of capacity and market policies, because the current market recovery customer base is unbalanced, regional imbalance, and stage imbalance are more prominent, such as international routes, the recovery rate in some places has exceeded 100%, and some places have only recovered 20%, This requires us to make flexible allocation of capacity and market sales, and also needs the green channel of the Civil Aviation Administration's air traffic right time policy, which is also a new test. ”
It is worth noting that in the "14th Five-Year Plan" civil aviation development plan, it is clearly mentioned that it is necessary to "scientifically regulate the total number of moments and the speed of fleet introduction to ensure the dynamic balance of overall supply and demand", and the expected goal of passenger traffic growth in the six years of 2020 and 2025 based on 2019 is that the average annual growth rate is only 59%。
For the entire industry, the current consensus is to suppress the growth of supply, and wait for the recovery of demand," Tang Chao told reporters, "The epidemic has been three years, until 2023, and the average annual compound growth rate of aircraft introduction in the industry is only 2."1%, which is well below the pre-pandemic level, and the average annual growth rate in 2024 and 2025 is also expected to be below 3%. And the number of airlines voluntarily withdrawing older aircraft will also increase. ”
According to the first financial reporter, China Southern Airlines will have 7 Airbus 330-200 passenger planes in 2023, and the company's wide-body fleet size will be reduced by 2 aircraft, and the company will continue to choose the opportunity to withdraw from some models in 2024 to reduce the scale of wide-body aircraft.
The reason why the old models that have withdrawn are mainly wide-body aircraft is because wide-body aircraft are mainly used to fly international routes, and the speed of recovery of international routes makes wide-body aircraft more surplus than narrow-body aircraft, and wide-body aircraft that cannot fly internationally return to China to grab the market, which also accelerates the "involution" of the domestic market.
According to the statistics of flight stewards, the number of flights operated by wide-body passenger aircraft in China in 2023 will increase by 5% compared with 20195%, the flight structure has changed greatly, and the proportion of domestic flights in the types of flights operated by it has increased from 601% to 798%, an increase of 197 percentage points, and the share in the domestic market (all domestic flights) also increased from 4 in 20196% to 63%。
The Civil Aviation Administration can also affect the growth rate of the industry through the regulation and control of aircraft introduction approvals. At the 2024 Civil Aviation Work Conference, "actively promoting the refined and differentiated management of the fleet, giving full play to the effectiveness of the mechanism of rewarding the good and punishing the inferior in the introduction of aircraft, guiding enterprises to optimize the fleet structure based on market demand, rationally arranging the delivery of capacity, and ensuring the coordinated matching of fleet growth and the industry's key resource support capabilities" has also become one of the key tasks in 2024.
The flight steward team pointed out in the macro **, civil aviation analysis and micro outlook report for 2024 that the civil aviation industry has gradually bid farewell to the past high-speed growth stage, and the model of simply relying on the input of production factors to have good returns in the past is unsustainable, for 2024, recovery is no longer the main theme, and the value of innovation will be gradually reflected.
According to the reporter's understanding, at present, some domestic routes have begun to study the product portfolio that enriches the needs of different personalized passengers according to the characteristics of subdivided channels, such as direct sales channels based on the differentiated travel characteristics of private domain customer groups, the launch of products such as flying with your heart and student travel, and the distribution channels are based on the high-quality travel needs of business customers, and the launch of travel ** and other products. Precision marketing through the development of accurate and flexible customized pricing and differentiated products.
The recovery of the market in the future will definitely not be a simple replication of the pre-epidemic situation, but will face comprehensive structural changes, including the domestic route market and the international route market. Zou Jianjun pointed out that therefore, adapting to the current Chinese national conditions, focusing on the experience economy, adhering to the demand-centered, and focusing on operational efficiency and development benefits should be the focus of the current supply-side structural reform of civil aviation.