The Zhitong Finance App learned that Huachuang Securities released a research report saying that the volume and price performance of the Spring Festival travel season has made a good start for the whole year, and the release of data is expected to change the excessive pessimism in the market due to off-season extradition. At the same time, it also provides data support and confidence for the airline's revenue management strategy. The bank continues to emphasize that 2023 is the base year for the new price mechanism, and it is recommended that the 2024 supply and demand price derivation base look at marginal changes on a 23-year basis.

Core recommendations: Focus on recommending Spring Airlines (601021.SH), which has high performance certainty, Air China (601111.SH), the flexibility of Air China (), and Juneyao Airlines (603885.SH), which currently has a cost-effective market value. Also, pay attention to China Airlines (002928.SZ) at the bottom of the valuation, and continue to recommend China Southern Airlines (600029.SH).

The main views of Huacheng Securities are as follows:

1. Spring Festival travel data:

1. According to statistics from the Ministry of Transport, 24 days before the Spring Festival travel season, the average daily movement of people across regions was 234.05 million, +14.1% compared with the same period in 2019; of these, the average daily passenger traffic of railways was 12.192 million, +24.6% compared to the same period in 2019; the average daily passenger traffic of civil aviation was 2.142 million, +18.4% compared with the same period in 2019.

2. According to Flight AI statistics, in the 24 days before the Spring Festival travel season, the average daily domestic delivery volume of civil aviation was 1.95 million, +21.0% compared to '19, and the average daily passenger occupancy rate was 84.0%, +0.3 pts compared to '19, and the number of cross-border passengers recovered 67.2%. The average daily domestic full fare for civil aviation (including oil, infrastructure) was 1,115 yuan, +12% year over year; average daily domestic raw ticket price was 996 yuan, +16% year over year, +13% year on year 19; average daily total cross-border fare was 2,076 yuan, -45% year over year, +11% compared to year 19.

2. Airline data for January:

1. Jixiang's overall RPK exceeded 34.4% in '19 and 29.3% in spring and autumn.

January: ASK Super 19: Jixiang (32.9%) > Chunqiu (28.4%) > China Eastern Airlines (9.4%) > China Southern Airlines (4.4%); RPK Super 19: Jixiang (34.4%) > Chunqiu (29.3%) > China Southern Airlines (6.0%) > China Eastern Airlines (5.0%) > Air China (0.7%);

1. Domestic flights: Chunqiu RPK over '19 67.0%, Jixiang Super '19 35.8%. January: ASK Super 19: Chunqiu (64.7%) > Jixiang (31.7%) > Air China (22.1%) > China Eastern Airlines (22.1%) > China Southern Airlines (19.2%); RPK Super 19: Chunqiu (67.0%) > Jixiang (35.8%) > China Southern Airlines (23.5%) > China Eastern Airlines (20.3%) > Air China (19.9%);

2. International flights: Jixiang ASK recovered 41.3% in more than 19 years, and China Eastern Airlines recovered to 85.6%. January: ASK recovered from '19: Jixiang (141.3%) > China Eastern Airlines (85.6%) > China Southern Airlines (76.5%) > Air China (74.3%) > Chunqiu (62.0%); RPK recovered from '19: Jixiang (127.5%) > China Eastern Airlines (77.3%) > China Southern Airlines (71.3%) > Air China (68.5%) > Chunqiu (59.7%);

3. Regional routes: Jixiang ASK recovered to 115.7%, China Eastern Airlines recovered to 105.3%. January: ASK recovered from 19: Jixiang (115.7%) > China Eastern Airlines (105.3%) > Air China (85.1%) > China Southern Airlines (62.9%) > Chunqiu (51.1%); RPK recovered from 19: Jixiang (116.6%) > China Eastern Airlines (91.6%) > Air China (72.9%) > China Southern Airlines (64.2%) > Chunqiu (52.4%).

2. Occupancy rate: 90.8% in Chunqiu, leading the industry.

January: Chunqiu (90.8%, YoY +5.8%, YoY +1.6%, YoY +0.6%) > Jixiang (83.5%, +9.4% YoY, +0.9% YoY) > China Southern Airlines (81.0%, +8.3% YoY, +1.6% month-on-month, +0.6% month-on-year) > Air China (77.6%, YoY +2.2%, YoY -2.9%) >China Eastern Airlines (77.4%, YoY +9.1%, YoY +1.9%) 4%, compared to -3.3% in '19).

3. Fleet: The total net increase of 3 aircraft for the 5 listed airlines in January was 0.1% compared to the end of 23.

3. Investment advice: Continue to be optimistic about the spring season.

Earlier, according to the Civil Aviation Administration's forecast, the number of passengers carried by civil aviation during the Spring Festival travel season will reach 80 million, an average of 2 million passengers per day, which is expected to reach a record high. This forecast figure is an increase of about 10% over the actual number in '19, and an increase of over 40% over the Spring Festival travel season in '23. With the release of Spring Festival travel data one after another, the average number of visitors per day reached 2.142 million in the first 24 days, +18.4% compared to 2019, which clearly exceeded previous predictions. At the same time, the characteristics of the “Homecoming + Travel” phase of the “Homecoming + Travel” tour are showing, driving the mid-wave valley not low. Typical domestic tourist destinations in Hainan and Northeast China have clearly exceeded the number of passengers in 19 years, and economy class sales have been sold out at peak return routes.

Furthermore, we see that on the 24 days before the Spring Festival travel season, the average passenger occupancy rate of civil aviation exceeded 0.3 pct during the Spring Festival travel season in '19, reaching 84.0%, and the peak passenger occupancy rate was over 90%. The data shows that capacity is expected to be fully absorbed in the context of a further increase in international flight launch and an increase in domestic demand. Under the catalyst of a double increase in passenger traffic and passenger occupancy rates, domestic ticket prices for the Spring Festival travel season showed impressive performance. In the first 24 days, the full domestic economy class fare was +19% compared to 19 years, and the naked fare was +13% compared to 19 years.

We believe that the volume and price performance of the Spring Festival travel season has made a good start for the whole year, and the release of data is expected to change the excessive pessimism in the market due to off-season extradition. At the same time, it also provides data support and confidence for the airline's revenue management strategy. We continue to emphasize that 2023 is the base year for the new price mechanism, and it is recommended that the 2024 supply and demand price derivation base look at marginal changes on a 23-year basis. Core recommendations: Focus on recommending Spring Airlines with high performance certainty, Air China's flexibility, and Juneyao Airlines, which currently has a cost-effective market value. At the same time, pay attention to China Airlines at the bottom of the valuation and continue to recommend China Southern Airlines.

Risk warning: A sharp decline in the economy, a sharp rise in oil prices, and a sharp depreciation of the RMB.