Text丨He Yan
Editor丨Xie Changyan
With the industry's negative basically exhausted, the agency believes that the entire aviation sector has the opportunity to lay out the bottom, and the Spring Festival is approaching, which is expected to catalyze the continued upward movement of the sector.
According to the data released by the Civil Aviation Administration of China, during the Spring Festival holiday (February 10-February 17) in 2024, the country's civil aviation will transport a total of 1,799 passengers20,000 passengers, with an average daily transport of 224 passengers90,000 passengers, a record high. On the a** field, the aviation and airport sector, a sub-sector of the transportation sub-sector, also performed well.
Since 2024, as of February 26, 2024, only 2 of the 12 A-share listed companies in the sector have appeared**, and the rest have achieved **, of which Spring Airlines and CITIC Sea have risen by more than 10%, and Juneyao Airlines and Shanghai Airport have risen by more than 5%.
The passenger volume of civil aviation in the Spring Festival may reach a new high
The performance of aviation airports is expected to be good on a large scale
The 2024 Spring Festival starts on January 26 and ends on March 5, for a total of 40 days. According to the Civil Aviation Administration**, the civil aviation passenger traffic during the Spring Festival will reach 80 million, with a daily average of 2 million passengers, an increase of 9 compared with the Spring Festival in 20198%, an increase of 44 compared with the Spring Festival in 20239%, it is expected that the average daily guaranteed flights of national aviation during the Spring Festival travel period will reach 1650,000 classes, basically the same as in 2019 and an increase of 24% from 2023.
In this regard, Han Tao, an expert from the Civil Aviation Administration of China's new civil aviation think tank, said to this magazine, "The comprehensive recovery of the aviation industry is worth looking forward to." Recently, the entry and exit policies have been further optimized, which will help promote the development of the domestic air tourism market. ”
At the level of listed companies, since 2024, as of February 26, 12 listed companies in the aviation and airport sector have achieved ** except for China Express Airlines and China Eastern Airlines. Among them, Spring Airlines, CITIC Haizhi, and Juneyao Airlines ranked the top three.
In terms of performance, from the first quarter to the third quarter of 2023, the operating income of China's major airlines basically returned to the level of the same period in 2019, and the net profit attributable to the parent company basically turned losses into profits.
Looking further, in addition to CITIC Haizhi, which has not yet released its 2023 annual performance forecast, other companies are expected to achieve year-on-year net profit in 2023, of which Xiamen Airport is expected to achieve a year-on-year increase in net profit of 1042%-1270%, ranking first among listed companies in aviation airports, while Spring Airlines is expected to achieve a net profit of 2.1 billion yuan to 2.4 billion yuan in 2023, ranking first in the sector. Looking forward to 2024, institutional analysis believes that the positive year-on-year growth of airline performance in 2024 is a high probability event.
Significant increase in international flights
The release of industry demand is accelerating
Judging from the current data, the international flight data is a highlight. As of November 2023, China's international and regional flight volume is 7,778 per week, recovering to 51 in the same period in 20193%。At the 2024 National Civil Aviation Work Conference, the Civil Aviation Administration of China said that in 2024, it will strengthen international cooperation and promote the accelerated recovery of the international market, and by the end of the year, international passenger flights are expected to reach 6,000 per week, and the capacity is expected to recover to 80% of 2019. Galaxy** predicts that by mid-2024 (especially catalyzed by the Spring Festival and May Day peak seasons in the first half of the year), the number of international flights is expected to recover to 100% of 2019 levels.
For example, from December 2023, China will try to implement a unilateral visa-free policy for ordinary passport holders from six countries: France, Germany, Italy, the Netherlands, Spain, and Malaysia. For example, from March 2024, China and Thailand will permanently exempt each other's citizen visas. The 30-day visa exemption policy between China and Singapore will officially take effect on February 9, 2024 (Chinese New Year's Eve).
Hong Yong, an expert from the think tank of the 50-person forum on the integration of China's data and reality, told this magazine, "The continuous recovery of subsequent international flights can be analyzed from two aspects: On the one hand, the relaxation of visa policies will directly stimulate aviation demand and promote airlines to increase the capacity of relevant routes; On the other hand, the recovery process of the tourism market and the effect of epidemic control in various countries will also affect the specific pace and scale of flight recovery. ”
In terms of China-US routes, the two countries reached a consensus to significantly increase direct flights between the two countries in early 2024.
Hong Yong believes that "the consensus on a significant increase in direct flights between China and the United States is a positive signal for airlines that have been affected by the epidemic for a long time. With the gradual recovery of international routes, especially those between China and the United States, airlines are not only expected to improve the performance decline caused by the reduction of flights, but also have the possibility of bottoming out under the combined effect of the recovery of market demand and the improvement of operational efficiency. However, the actual performance needs to be comprehensively considered in combination with various factors such as global economic trends, industry competitive environment, and company cost control. ”
Specifically, in terms of listed companies, Juneyao Airlines regained its lead in terms of revenue passenger kilometers (RPKs) on international and regional routes. According to the company's announcement, the RPK of international and regional routes in December 2023 compared with 2019: Juneyao Airlines -9%, China Eastern Airlines -27%, China Southern Airlines -33%, Air China -34%, and Spring Airlines -62%. From January to December 2023, the cumulative RPK of international and regional routes increased year-on-year in 2019: Juneyao Airlines -32%, China Southern Airlines -56%, China Eastern Airlines -59%, Spring Airlines -62%, and Air China -62%.
Li Dan, an analyst in the aviation and airport industry of Zheshang**, believes that "international flights will continue to recover as a definitive trend in 2024, on the one hand, it will effectively increase the daily utilization rate of aircraft and dilute fixed costs; On the other hand, a large number of wide-body aircraft piled up in the domestic market will return to the international market, and the supply pressure in the domestic market will be significantly eased. In addition, the oil price and exchange rate environment are expected to improve year-on-year in 2024, and the pressure on the cost side of airlines may be eased, which is good for the release of airlines' performance. Since November 2023, Brent*** has fallen below $80 per barrel, and the pressure on the cost side of airlines has weakened month-on-month; In terms of exchange rate, the bottom of the RMB will gradually be established in the second half of 2023, and the ** Financial Work Conference at the end of October will emphasize the need to maintain the basic stability of the RMB exchange rate at a reasonable and balanced level. ”
Benefiting from the recovery in aviation demand
The value of the airport channel is expected to be reshaped
Benefiting from the recovery in aviation demand, airport passenger traffic has also continued to recover, with the domestic market recovering to the same period in 2019. In October 2023, the passenger volume of Shanghai Airport, Guangzhou Baiyun Airport, Beijing Capital Airport, and Shenzhen Bao'an Airport recovered to 2019 levels, domestic route passenger volume recovered to 2019 levels, and international and regional passenger traffic recovered to 2019 levels.
The value of the airport channel is also being reshaped. "The future growth point of airport listed companies mainly comes from two directions: First, the income related to the aviation business, such as take-off and landing fees, passenger service fees and security fees, etc., the growth of this part of the income is closely related to the air transport volume, and it is expected that with the recovery of aviation demand, this part of the income will rise; The second is non-aeronautical revenue, of which duty-free business accounts for a large proportion, with the growth of inbound and outbound passenger flow, duty-free sales may increase significantly, bringing new profit growth points to the airport. Hong Yong said.
The airport channel has an excellent duty-free consumption format, and duty-free business has become the most important profit growth engine for China's major airports. Before the pandemic, the airport channel was very attractive to duty-free operators. Before the epidemic, from 2017 to 2018, China Duty Free, a leading duty-free operator, successively signed duty-free agreements with first-tier airports in Beijing, Shanghai and Guangzhou, such as Shanghai Airport, Capital Airport and Baiyun Airport. In 2019, CDFG achieved duty-free sales of 13.8 billion yuan, 8.6 billion yuan and 1.9 billion yuan respectively at Shanghai Airport, Capital Airport and Baiyun Airport, and the duty-free income converted into airports according to the deduction rate was about 5.5 billion yuan and 3.9 billion yuan respectively.7700 million yuan.
On December 27, 2023, CDFG signed a new round of duty-free supplementary agreements with Shanghai Airport (Shanghai Pudong Airport, Shanghai Hongqiao Airport) and Capital Airport respectively. The new supplemental agreement reverts to the tax-free income collection model of "minimum guarantee and high sales commission", while the deduction rate is reduced to 18%-36%.
The duty-free channel is one of the most important revenues for airports**, and the cooperation between duty-free operators and airports is essential to reshape the value of duty-free channels. With the signing of a new round of duty-free supplementary agreements, the cooperation between duty-free operators and airports will be strengthened, which will help to increase the value of duty-free channels. At the same time, sales from the duty-free channel will also have a positive impact on the airport's overall revenue and profitability. Bai Wenxi, chairman of the China Enterprise Capital Alliance, believes.
Zheshang** expects that the next round of tax-free contracts may still maintain the rent calculation model of "the highest minimum guarantee and sales commission". The current round of contracts for Shanghai, Guangzhou and Beijing airports will basically end in 2025 and 2026, which means that the airport will conduct the next round of tax-free contract bidding in 2024 and 2025, and the rental calculation model will still be linked to sales.
Since the beginning of 2023, with the recovery of international passenger flow after the epidemic, the current opening rate of duty-free shops in major airports has reached about 67%, and the airport duty-free business is still in the process of continuous recovery.
(This article was published in the Feb. 10 issue of Market Weekly.) The ** mentioned in the article is only for example analysis and does not make trading advice. ）