The Zhitong Finance App learned that Dongxing Securities released an airline airport data review for February, according to the February operating data released by listed airlines, the civil aviation industry is driven by the Spring Festival travel season, and domestic and international demand have clearly increased, mainly reflected in a sharp increase in passenger occupancy rates from month to month. The industry is in a critical phase of recovery from the bottom. Strong performance during the Spring Festival travel season indicates a substantial recovery in demand for civil aviation. The profit performance of the civil aviation industry this year is expected to be significantly better than last year. After experiencing a sharp drop in the stock prices of several major airlines over the past year, the margin of safety became prominent, and it is worth paying close attention to.

Domestic routes: Strong demand led to a significant month-on-month increase in passenger occupancy

During the Spring Festival travel season in February, the civil aviation industry showed strong data. According to data released by flight managers, during the 2024 Spring Festival period (February 10 to February 17), the number of passengers carried by civil aviation reached 17.992 million, reaching an average of 2.249,000 passengers per day, the highest level of the Spring Festival in previous years. The average daily passenger traffic volume increased 25.1% over the same period in 2019 and 74.8% over the same period in 2023. In addition to the increase in volume, there has also been a significant increase in ticket prices. According to flight manager data, during the 2024 Spring Festival, the average civil aviation economy class ticket price reached 1,011 yuan, an increase of 16% over 2019 and an increase of 19.5% over 2023.

Airlines' operating data and Spring Festival travel data can also confirm each other well. In terms of domestic routes, domestic capacity investment in February increased slightly compared to January. Since capacity investment during the Spring Festival month in previous years mostly declined month-on-month, this year's capacity investment was actually quite positive. As can also be seen from the year-on-year growth rate, domestic route capacity investment in January was equivalent to about 124% of 2019, and increased to 132% in February.

Passenger occupancy rates of all airlines increased dramatically in February, with the overall increase of about 4.6 percentage points for listed airlines. Achieving this result with a relatively high level of capacity investment is enough to show that demand is strong during the peak season. The passenger occupancy rate of Jixiang (603885.SH) and China Southern Airlines (600029.SH) surpassed the same period in '19; there is still a gap of about 1.3 percentage points in the overall passenger occupancy rate of the industry, and the gap has narrowed significantly; the passenger occupancy rate in Chunqiu (601021.SH) increased less than 90% month-on-month. In the case of a high passenger occupancy base, compared to continuing to increase passenger occupancy rates, increasing ticket prices on the basis of stabilizing passenger occupancy rates is a better profit strategy.

Overall, the impact of the epidemic on the Spring Festival travel season has basically subsided, industry operations are back on track, and demand is strong.

International routes: Capacity investment returned to 80% in the same period in '19, and passenger occupancy rates improved markedly

In terms of international routes, the capacity investment in February was basically the same as in January, but the percentage of capacity investment increased to about 82% compared to the same period in '19 (about 76% in January).

Looking at the various airlines, similar to January, capacity investment of medium carriers increased a lot month-on-month. Jixiang and Chunqiu increased 31.7% and 14.4% month-on-month respectively. Among them, Jixiang increased its capacity significantly on international routes for 2 consecutive months. In contrast, several large airlines slightly reduced their capacity investment in February compared to the previous month.

In terms of passenger occupancy rates, the increase in passenger occupancy rates on international routes was as high as 7 percentage points month-on-month, which is impressive. As a result, although there was a slight drop in capacity compared to January, the actual number of passengers increased significantly compared to January. Although the sharp increase in passenger occupancy rates also has its own low base, it is also sufficient to indicate an improvement on the demand side.

Peak season flexibility has been verified. Follow up on off-season performance

Looking at it now, the peak season flexibility of domestic routes this year has been fully verified; what needs to be tested later is off-season performance. Last year, due to restrictions on international routes, the accumulation of capacity on domestic routes led to oversupply, and off-season ticket prices and passenger occupancy rates declined markedly. However, with the gradual restoration of capacity investment on international routes this year, the problem of overcapacity on domestic routes will be significantly alleviated, and off-season performance is also expected to improve markedly. Therefore, the off-season data for the next March-April period is also worth paying close attention to.

Risk warning: macroeconomic downturn; civil aviation policy changes; safety incidents; large fluctuations in oil prices and exchange rates; abnormal weather factors, etc.