Investment Rating - The investment rating for the aviation transportation industry is "Positive" [2]. Core Viewpoints - The industry has maintained a high passenger load factor, and ticket prices have shown a positive trend since October 2025. This is expected to lead to a significant recovery in airline unit revenue. The implementation of measures against "involution" and the "Self-Regulation Convention" is anticipated to reduce malicious low pricing, further supporting ticket price recovery and airline profitability. Additionally, the decline in oil prices is expected to lower costs, enhancing airline earnings potential. Key airlines to focus on include China Southern Airlines, China Eastern Airlines, Air China, Spring Airlines, and Juneyao Airlines [2][13]. Summary by Sections 1. Investment Recommendations - Since the beginning of 2025, the industry has seen sustained high passenger load factors. The supply-demand dynamics indicate a slowdown in capacity growth, with airlines focusing on international routes. The overall passenger turnover has shown steady growth, and ticket prices have been recovering since October, leading to improved airline unit revenue and performance in the fourth quarter [12][13]. 2. Passenger Load Factor and Ticket Prices - The industry has experienced a continued high passenger load factor, with the September 2025 load factor reaching 86.3%, an increase of 2.4 percentage points year-on-year. In October, the combined passenger turnover for six major airlines showed a year-on-year increase of 9.2% [3][21]. - Ticket prices have shown a positive trend since November, with the average domestic ticket price at 850 RMB, down 7.2% year-on-year. However, from October to mid-November, the average ticket price for domestic routes was 738 RMB, reflecting a 0.3% increase year-on-year [4][22]. 3. Oil Prices and Exchange Rates - The average price of aviation fuel remained stable year-on-year, with domestic aviation fuel prices at 5572 RMB/ton in October and 5625 RMB/ton in November, showing minimal change. The exchange rate of the RMB has appreciated since the beginning of 2025, with the USD to RMB exchange rate decreasing by 1.43% from the end of 2024 to mid-November 2025 [4][36]. 4. Airline Capacity and Operations - In October 2025, most airlines reported a year-on-year increase in capacity, with domestic routes showing steady growth. The passenger load factor for domestic routes was notably high, with significant increases in turnover for major airlines. The introduction of new aircraft has also been observed, with Hainan Airlines adding four new aircraft in October, the highest among the six major airlines [5][43].

Group 1 - Airline stocks experienced significant declines, with China National Aviation (00753) down 5.31% to HKD 5.17, China Eastern Airlines (00670) down 4.09% to HKD 3.05, China Southern Airlines (01055) down 3.28% to HKD 3.83, and Capital Airport (00694) down 1.3% to HKD 3.04 [1] - In July, listed airlines reported a 2.3% year-on-year increase in domestic route capacity, with a 20.5% month-on-month increase compared to June. However, the year-on-year growth rate is considered low [1] - The overall passenger load factor for listed airlines in July improved by approximately 0.6 percentage points year-on-year, but decreased by 1.0 percentage points month-on-month compared to June. This indicates that the demand during the peak season may be weaker than expected [1] Group 2 - The China Air Transport Association released the "Self-Discipline Convention for Air Passenger Transport" on August 14, reflecting the industry's intention to improve the operating environment. Although the convention is not mandatory, it may marginally enhance the operating conditions for airlines [2] - The overall industry remains at a low level of prosperity due to insufficient demand for business travel during the peak season. However, if the industry shifts its revenue management towards balancing volume and price, airlines' revenue levels may improve [2]

Core Viewpoint - The China Air Transport Association (CATA) has officially released the "Self-Discipline Convention for Air Passenger Transport" during the China Regional Aviation Development Conference, emphasizing the need for stricter supervision and management of airline ticket pricing and refund policies [1] Group 1: Regulatory Measures - CATA will enhance supervision over airline sales networks and agents regarding ticket prices and refund/change rules, prohibiting illegal bundled sales and additional charges [1] - Airlines are required to issue standardized invoices in accordance with national regulations within their distribution channels [1] - Compliance with the "Public Air Transport Passenger Service Management Regulations" is mandated for all involved parties [1]