CICC: In 2026, the civil aviation industry may actually enter an upward cycle and focus on aviation off-season investment opportunities

The Zhitong Finance App learned that CICC released a research report saying that 2026 will be the year of a real reversal in aviation supply and demand, and the industry will gradually enter a situation where supply is in short supply. China's civil aviation industry has experienced a low supply growth rate for many years, and the growth in aviation demand has gradually absorbed excess capacity. In 2026, tight supply and demand will cause the industry's passenger occupancy rate to peak again (the bank expects a passenger occupancy rate of 87% in 2026); industry ticket prices may rise moderately to cope with insufficient supply, and the civil aviation industry has actually entered an upward cycle. The bank focuses on off-season aviation investment opportunities. In the past, aviation investment focused on the peak season, but supply disturbances may cause the industry's off-season supply and demand to be tighter in 2026, and the off-season ticket price increase or greater, so the performance of listed companies may also improve even more during the off-season.

CICC's main views are as follows:

supply

Due to insufficient production capacity+engine disturbances, effective supply is still tight in 2026. The bank expects the entire ASK industry to grow by 2.7% in 2026. Boeing and Airbus production capacity recovery is slow (current production capacity is only about 70% before the pandemic). At the same time, global aviation supply chain issues, especially engine quality issues, still exist and continue for a long time. The bank expects the China Airlines passenger fleet to grow by about 2.1% year on year in 2026. The current aircraft utilization rate is already high, and there is limited room for further improvement in 2026.

demand

Resilience remains, and is constrained by supply, the bank expects a growth rate of about 5% in 2026. Constrained by tight supply and limited room for passenger occupancy increases, the bank expects actual demand to grow by about 5% year on year in 2026 (the bank believes that potential demand will grow at a rate higher than 5% year on year). As high-speed rail prices rise and air travel distances increase, the alternative effect of high-speed rail on aviation weakens marginally. Meanwhile, the gradual return of public and business travelers has further contributed to the growth in aviation demand.

ticket price

Growth is moderate, and the increase in the off-season is likely to be greater than during the peak season. As supply and demand reverse, the bank expects a moderate increase in ticket prices in 2026, gradually approaching 2019 levels. The increase in ticket prices may fluctuate with the season, and the increase in ticket prices in the off-season may be greater than during the peak season, because supply and demand in the off-season industry may be superior to the peak season.

Valuation and recommendations

Maintain the ratings, profit forecasts, and target prices of the covered targets unchanged. The low growth rate of aviation supply lays a solid foundation for the cycle. The drop in oil prices has greatly improved costs. If demand rebounds clearly, it will bring high profit flexibility. China Eastern Airlines H/A, China Airlines, Juneyao Airlines, and Spring Airlines are recommended.

risk

Aircraft manufacturers' production capacity increased; oil prices rose sharply; RMB depreciated sharply; economic growth fell short of expectations, and aircraft engine maintenance cycles were shortened.