According to the CITIC Securities Research Report, the sharp increase in oil prices has significantly amplified the profit differentiation of airlines. In the first three weeks/May of April, the full domestic fare increased by 17.0%/12.7% to 900/916 yuan. The double-digit increase in domestic fares opens up flexible space. If a steady decline in fuel prices in the future leads to a reduction in fuel surcharges, bare fares are expected to accept some of the surcharge reduction space. The industry was affected by short-term disturbances in the early summer travel season. Excluding typhoon weather, the traffic growth rate was fixed month-on-month. The second half of July may be an important window for verifying demand resilience and ticket price improvements. Considering the introduction of supply-side aircraft and strong schedule volume restrictions in the next two years, it is expected that aviation fuel cost mitigation and bare ticket price compensation will resonate at some point in time and be transmitted to quarterly profits. It is recommended to focus on aviation sector valuation repair driven by the stabilization of oil prices, the beginning of an inflection point in summer transportation volume and prices, and the continued boom in international flights.

According to the CITIC Securities Research Report, the sharp increase in oil prices has significantly amplified the profit differentiation of airlines. In the first three weeks/May of April, the full domestic fare increased by 17.0%/12.7% to 900/916 yuan. The double-digit increase in domestic fares opens up flexible space. If a steady decline in fuel prices in the future leads to a reduction in fuel surcharges, bare fares are expected to accept some of the surcharge reduction space. The industry was affected by short-term disturbances in the early summer travel season. Excluding typhoon weather, the traffic growth rate was fixed month-on-month. The second half of July may be an important window for verifying demand resilience and ticket price improvements. Considering the introduction of supply-side aircraft and strong schedule volume restrictions in the next two years, it is expected that aviation fuel cost mitigation and bare ticket price compensation will resonate at some point in time and be transmitted to quarterly profits. It is recommended to focus on aviation sector valuation repair driven by the stabilization of oil prices, the beginning of an inflection point in summer transportation volume and prices, and the continued boom in international flights.