Investment Rating - The industry investment rating is "Overweight (Maintain)" [2] Core Viewpoints - The supply-demand pattern continues to improve, signaling the start of an upward cycle for the aviation industry. In Q3 2025, the industry's existing supply is being continuously digested, with peak season aircraft utilization exceeding that of 2019, indicating a potential slowdown in future supply growth. Additionally, significant investment in international routes and limited growth in domestic capacity suggest an optimization of the domestic competitive landscape, with high passenger load factors likely leading to improved ticket prices. Currently, favorable oil prices and exchange rates are expected to create a "not-so-slow" trend in Q4, with the industry likely to significantly reduce losses and release profit elasticity in 2026 [3][45]. Summary by Sections Industry Performance - In Q3 2025, overall flight volume increased by 3% year-on-year, with domestic and international flight volumes growing by 2% and 12%, respectively. Passenger volume also rose by 3.90% overall, with domestic and international passenger volumes increasing by 2.84% and 15.31% [3][12][19]. - The aircraft utilization rate has improved year-on-year, with the industry achieving an average utilization of 10 hours in July and August, exceeding the same period in 2019 by 3% and 4% [3][26]. Financial Performance - In Q3 2025, the total operating revenue for major airlines increased year-on-year, with China Southern Airlines, China Eastern Airlines, and others showing growth rates of 3.0%, 3.1%, and 1.8%, respectively. However, the operating costs for most airlines also increased, with China Southern and China Eastern slightly exceeding expectations [3][35][41]. - The average price of aviation kerosene in Q3 2025 was 5593 RMB/ton, a decrease of 11.05% year-on-year, contributing to lower operational costs for airlines [3][41]. Investment Recommendations - The investment focus is on two main lines: 1. The performance elasticity brought by rising ticket prices, recommending major airlines with larger fleets and strong cyclical attributes, as well as Hainan Airlines benefiting from specific policies, and the privately-owned airline with the best route network, Juneyao Airlines [3][45]. 2. The certainty of operational performance, recommending Huaxia Airlines with stable subsidies and Spring Airlines, which has clear cost advantages and neutral exchange rate exposure [3][45].