Industry Analysis: Aviation Sector Key Points Industry Overview - The aviation industry is experiencing a cyclical recovery and benefiting from a new era of growth, with a focus on countering internal competition and price wars [1][2] Pricing Dynamics - A minimum price restriction is expected to elevate the central price of tickets, although demand may face disruptions [1] - For flights under 800 kilometers, ticket prices are set to not fall below 300 yuan [1][2] Growth in Inbound Tourism - Inbound tourism is projected to offset the impact of increased tariffs on exports [2] - Since the end of 2023, there has been an expansion of visa exemptions, leading to a 52% increase in inbound foreign visitors from January to September 2025, and a 25% growth in international air passengers [3] Strategic Recommendations - The "14th Five-Year Plan" suggests expanding inbound consumption to further boost tourism [3] Aircraft Supply Constraints - The decoupling from the U.S. and supply chain disruptions are limiting aircraft production [4] - Aircraft supply is expected to grow at 4%, which is below the demand growth rate of 8%, leading to a supply-demand gap that may enhance profit margins [4] Profitability Potential - If domestic airlines can achieve a net profit margin of 7%, similar to the overseas average, the net profits of the three major airlines could exceed 10 billion yuan [4] - The disruption of aircraft supply from Russia in 2022 is anticipated to result in an 18-fold increase in airline net profits from 2019 to 2024 [4] Market Share Expansion - From 2013 to 2024, domestic airlines are expected to increase their market share in international passenger traffic from 42% to 66%, with projections of reaching 70% by November 2025 [4] - The increase in market share is attributed to lower ticket prices, with domestic airlines' international ticket prices being nearly 20% lower than foreign airlines in 2014, and nearly 40% lower in the first half of 2025 [4]