China Merchants Securities: Demand in the aviation industry continued to be high in November, domestic off-season was not weak, and international recovery accelerated

The Zhitong Finance App learned that China Merchants Securities released a research report saying that in November 2025, the passenger turnover of civil aviation was 109.9 billion people kilometers, +18.2% year over year 19, and +9.6% year over year 24; in November, full domestic flight ticket prices were +3.5% year over year, and naked ticket prices were +3.8% year over year. In terms of passenger transportation, China had 15,977 international and regional cargo flights, +12.4% month-on-month and +14% year-on-year. From a medium- to long-term perspective, the continued rise in industry profits will support the restoration of market value. In the short term, Q4 benefits from increased demand and a steady recovery in ticket prices. The off-season is expected to reduce losses sharply year on year. 25 is expected to be the first year for Air to reverse losses; the full year '26 is expected to be the first year for Air to release profit flexibility.

The main views of China Merchants Securities are as follows:

Air passenger transport core data

1) Demand, the passenger turnover of civil aviation in November 2025 was 109.9 billion people kilometers, +18.2% year on year 19, and +9.6% year on year 24; passenger turnover on routes within China (excluding regions) was 80.9 billion people kilometers, +19.6% year on year 19, and +6.3% year on year 24; passenger turnover on international and regional routes was 29.1 billion people kilometers, +14.5% year on year 19, and +19.9% year on year 24.

2) Supply. In November 2025, the number of seats available for civil aviation was 128.3 billion people kilometers, +12.4% year on year 19, and +6.4% year on year 24; the passenger occupancy rate for civil aviation was 85.7%, +4.2 pct year on year 19, +2.5 pct year on year 24; the daily utilization rate of aircraft reached 8.7 hours, -5.4% year on year 19, and +3.6% year on year 24.

3) Fares. In November, the full domestic flight fare was +3.5%, and the naked ticket price was +3.8% year-on-year.

4) Listed airline performance, the year-on-year changes in RPK for China Southern Airlines/Air China/China Airlines/Hainan Airlines/Chunqiu/Jixiang domestic routes in November were +7.4%/+7.4%/+5.1%/+5.1%/+5.1%/+5.1%/+5.1%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+4.5%/+17.9%/+0.8% K year-on-year changes were +19%/+17.5%, respectively /+22.8%/+24.4%/+18.1%/+38.4%. The year-on-year changes in China Southern Airlines/Air China/China Eastern Airlines/Hainan Airlines/Chunqiu/Jixiang International routes were +17.3%/+8.1%/+16.6%/+22.2%/+12.9%/+26.8%, respectively.

Air cargo core data

In November 2025, China's international and regional cargo flights were 15,977, +12.4% month-on-month and +14% year-on-year; China's international and regional cargo flight volume theoretical capacity was 11 billion tons, +8.2% month-on-month, and +12.2% year-on-year. In November, the TAC Shanghai outbound air freight price index averaged 5,469 points, +1.5% month-on-month and +16.2% year-on-year.

Investment view: The holiday period on New Year's Day has increased, and the volume and price of the industry have increased dramatically year-on-year. Focus on the performance of the Q1 Spring Festival travel season

1) High-frequency price performance improved significantly year-on-year. New Year's Day, Wednesday, and just 1 day of vacation in '25 had an adverse impact on leisure and business travel, forming a low base. The main indicators increased significantly year-on-year on the low base in '26. In the past 7 days (by week, 25-12.29-26 1.4 vs 24-12.30-25-1.5), civil aviation passenger traffic was +12.9%, domestic passenger flow +13.7%, bare ticket price +7.9%, fuel included ticket price +10.3%, passenger occupancy rate +7.6pts, and international and regional passenger flow +7.4%. 2) Looking ahead, there are clear trends in industry supply and demand restoration, oil remittance conditions improvement, and profit recovery. From a medium- to long-term perspective, the continued rise in industry profits will support the restoration of market value. In the short term, Q4 benefits from increased demand and a steady recovery in ticket prices. The off-season is expected to reduce losses sharply year on year. 25 is expected to be the first year for Air to reverse losses; the full year '26 is expected to be the first year for Air to release profit flexibility; the 26th Spring Festival travel season benefits from increased demand, a year-on-year decline in aviation fuel prices, and is expected to achieve a sharp year-on-year increase in profits. It is recommended to focus on the volume and price performance of the Spring Festival travel season. Recommended targets: Air China, China Southern Airlines, Juneyao Airlines, Spring Airlines, China Airlines; Recommended attention: China Eastern Airlines.

Risk warning: macroeconomic downturn, sharp devaluation of RMB, sharp rise in oil prices, major natural disasters, etc.