Shenwan Hongyuan Group: Initial results in the aviation industry's "anti-inside-out" campaign are starting to show, with a focus on continuous improvement in the performance of airport sectors.

Shenwan Hongyuan Group released a research report stating that they continue to recommend the aviation sector. The current aircraft manufacturing chain is facing unprecedented difficulties, with supply highly constrained and passenger load factors continuously reaching historical highs. The growth trend in inbound and outbound passenger volume is confirmed, and more capacity will be allocated to international routes. With the industry at a turning point, airline profitability is expected to see significant improvement, and airlines may enter a golden age. Pay attention to global aircraft leasing companies and airport sectors with continuously improving performance. Key points from Shenwan Hongyuan Group: - The National Civil Aviation Work Conference focuses on "improving quality and efficiency," and initial results in combating overcompetition are starting to show. - On January 6, 2026, the National Civil Aviation Work Conference proposed to promote the qualitative and effective improvement and rational growth in the civil aviation sector. Key tasks for 2026 were clarified, aiming to achieve transportation total turnover of 175 billion ton-kilometers, 810 million passenger trips, and 10.7 million tons of cargo transport by 2026, with year-on-year growth rates of 6.7%, 5.2%, and 5.2% respectively. Measures such as scientific control of domestic routes, improved control measures, and coordination to strengthen sales network platform supervision are expected to improve industry competition and enhance airline profitability. According to third-party data, domestic oil ticket prices increased by 2% compared to the previous week, with an improved growth rate (according to the lunar calendar). Supply Side: The global aircraft supply chain has not yet recovered, and the aging of aircraft exacerbates supply shortages. - Presently, there is a slight easing in the anti-globalization trend, but supply chain repair will still take time. Airbus delivered 793 aircraft in 2025 (compared to 863 in 2019), while Boeing delivered 600 aircraft in 2025 (compared to 803 in 2018), with delivery levels still below pre-pandemic levels. The order backlog for these two manufacturers exceeds 15,000 aircraft (equivalent to 8-10 years of production capacity), and the delivery cycle for new aircraft has extended to 6.8 years, up from 4.5 years in 2018. Airlines are forced to extend the service life of older aircraft, and the supply constraints are expected to continue in 2026. The Chinese aviation industry is also affected by the disorder in the global aircraft supply chain, with the total number of Chinese airline passenger aircraft expected to reach 4,271 by 2025, a growth of only 4.0% year-on-year. Chinese airlines will gradually face a peak period of aircraft retirement, with over 600 aircraft reaching 20 years old by the end of 2030. With limited existing orders and a difficulty in meeting replacement demands, aircraft supply constraints will become increasingly prominent. Demand Side: Visa-free policies driving increased inbound tourism, with the Spring Festival travel season expected to be even busier. - The Chinese Ministry of Foreign Affairs has been implementing various visa-free policies to attract foreign tourists, leading to a surge in foreign visitors to China. Over the past few quarters, visa-free inbound foreign visitors have accounted for over 70% of the total, and the number of foreign visitors entering core cities such as Beijing and Shanghai has exceeded 2019 levels. Cross-border passenger flow is expected to maintain rapid growth, making international routes the core engine of demand growth in 2026. Furthermore, the Spring Festival peak demand season is expected to highlight supply-demand contradictions, with passenger load factors already at historical highs and demand increasing significantly. In an environment with limited capacity for expansion, airlines have the capability to translate demand growth into price advantages. The Spring Festival peak travel season in 2026 (February 2 to March 13) is approaching, with DAST predictions indicating a 5.3% year-on-year increase in daily air passenger volume. Pre-sale ticket prices are 20% higher than the actual prices in the 2025 Spring Festival, suggesting a trend of simultaneous increase in volume and prices in the 2026 Spring Festival. Risk Warning: Significant fluctuations in oil and exchange rates, economic growth falling short of expectations, and the risk of aviation safety incidents.