Group 1: Global Aviation Demand - Global air passenger demand increased by 5% in May 2024, indicating a positive outlook for the industry [1][3] - Global air cargo demand, measured in cargo ton kilometers (CTKs), grew by 2.2% year-on-year in May 2024, with international demand rising by 3.0% [1] - Air cargo capacity, measured in available cargo ton kilometers (ACTKs), also saw a year-on-year increase of 2.0% in May 2024, with international capacity up by 2.6% [1] Group 2: Regional Performance - Asia-Pacific airlines experienced the highest growth in air cargo demand at 8.3% year-on-year in May 2024, with capacity increasing by 5.7% [2] - North American airlines reported a decline in air cargo demand by 5.8% year-on-year, the slowest growth among all regions, with capacity down by 3.2% [2] - European airlines saw a 1.6% increase in air cargo demand, with capacity rising by 1.5% [2] - Middle Eastern airlines recorded a 3.6% increase in air cargo demand and a 4.2% rise in capacity [2] - Latin American airlines had a 3.1% increase in air cargo demand, with capacity up by 3.5% [2] - African airlines experienced a decline in air cargo demand by 2.1%, while capacity increased by 2.7% [2] Group 3: Passenger Travel Insights - Total air passenger demand, measured in revenue passenger kilometers (RPK), grew by 5.0% year-on-year in May 2024, with total capacity also increasing by 5.0% [2] - The passenger load factor for May 2024 was 83.4%, a slight decrease of 0.1 percentage points year-on-year [2] - International passenger demand rose by 6.7% year-on-year, with capacity increasing by 6.4% and a load factor of 83.2%, marking a historical high for May [2] - Domestic passenger demand grew by 2.1% year-on-year, with capacity up by 2.8% and a load factor of 83.7%, down by 0.5 percentage points [2] Group 4: Market Challenges and Outlook - The air travel demand growth is uneven, with the Asia-Pacific market leading at 9.4%, while North American demand decreased by 0.5% [3] - Geopolitical instability, particularly in the Middle East, poses challenges for aviation operations in certain regions [3] - Despite low oil prices, geopolitical risks could impact oil prices, but consumer confidence remains strong, with optimistic expectations for the summer travel season [3]

Investment Rating - The report recommends an "Outperform" rating for the aviation sector, indicating a positive outlook for the industry relative to the overall market performance [72]. Core Insights - The global aviation market is expected to see sustained growth in demand over the next two decades, with a compound annual growth rate (CAGR) of 3.6% for global air passenger traffic, particularly driven by the Asia-Pacific region [3][5]. - The aircraft supply chain is currently facing significant disruptions, with recovery efforts progressing slowly due to multiple challenges [4][32]. - The demand for aircraft is projected to remain high, with the global fleet expected to double to 49,220 aircraft by 2044, driven by both fleet expansion and the need for fleet renewal [5][13]. - The narrow-body aircraft segment is anticipated to dominate future demand, accounting for 81% of the total aircraft demand [20][21]. - The supply of aircraft has fallen short of demand, leading to increased values and rental rates for aircraft and components [5][63]. Summary by Sections Future Demand Outlook - The aviation demand is projected to grow significantly, with the average number of flights per person in China increasing from 0.6 in 2024 to 1.8 by 2044 [6][10]. - Emerging markets in Asia-Pacific, the Middle East, and Africa are expected to surpass North America and Europe in terms of aviation capacity share, reaching over 50% by 2044 [10][11]. Aircraft Supply Chain Challenges - The aircraft supply chain is currently disordered, with significant gaps in supply for narrow-body and wide-body aircraft, estimated at 1,200 and 300 units respectively [32][49]. - Manufacturers are struggling with delivery capabilities, with production levels still below pre-pandemic figures [37][46]. Investment Recommendations - The report suggests focusing on the aviation sector due to limited supply growth and resilient demand, with specific recommendations for airlines such as China Eastern Airlines, China Southern Airlines, and Spring Airlines [71][72]. - It also highlights opportunities in global aircraft leasing companies and maintenance service providers [71].