Guolian Minsheng Securities: Domestic passenger load factor increased, optimistic about the continued expansion of international routes in 2026.

Guolian Minsheng Securities released a research report stating that the domestic airline routes continue to have a tense supply-demand relationship. The 2026 Civil Aviation Work Conference proposed "rectifying low ticket prices," and is optimistic about domestic airline ticket prices entering a mild upward trend in 2026, with inbound tourism driving airlines to continue to deploy capacity to international routes. The tight supply-demand relationship of aviation industry is highlighted in the business cycle, with the medium-term supply logic remaining tight and the short-term utilization and load factors continuing to operate at high levels. The supply-demand gap has already been reflected. The Civil Aviation Work Conference proposed "rectifying low ticket prices," which will help to establish a mechanism to transmit the tension between supply and demand to price increases. In terms of international routes, although international routes saw an increase in quantity but a decrease in price in 2025, the report believes that international routes will gradually enter a stage of quantity-price joint increase in 2026 driven by inbound tourism. The main points of Guolian Minsheng Securities are as follows: In December, the industry's demand growth rate continued to exceed supply, with domestic load factor increasing and international load factor stabilizing. In December, the industry's supply-demand continued to grow, with demand growth rate exceeding supply growth rate. According to the announcements of various companies, in December, the total ASK/RPK of six listed airlines on the A-share market increased by +6.6%/+9.1% year-on-year. The domestic load factor increased, while the international load factor stabilized due to disruptions on the Japan route. In terms of supply, the growth rate of domestic routes in December remained low: the ASK/RPK of six airlines on domestic routes in December increased by +4.2%/+7.2% year-on-year, with a load factor reaching 85.7%, an increase of 2.4 percentage points year-on-year, the highest level in December in recent years. The growth rate of international routes in December decreased year-on-year: in December, the ASK/RPK of six airlines on international routes increased by +12.0%/+13.3% year-on-year, with a load factor increasing by 0.9 percentage points year-on-year. The growth rate of international demand decreased compared to November (around 20% growth rate in November). The ASK/RPK in December was 107.2%/108.8% of the same period in 2019, with a slowdown in monthly recovery due to disruptions in demand on the Japan route, but the trend continues. In December, the industry's aircraft utilization rate remained high, with a slight year-on-year increase in domestic ticket prices and a decrease in international ticket prices. The industry's quantity-price performance continued for the past few months, with high utilization rates, high load factors, and stable ticket prices. Aircraft utilization rate: Flight Manager shows that the industry's aircraft utilization rate in December was 7.6 hours, a slight decrease of 0.1% year-on-year. Wide-body aircraft increased by 3.2% year-on-year, while narrow-body aircraft decreased by 1.4% year-on-year. Load factor: In December, the load factor on domestic routes of the six airlines was 85.7%, an increase of 2.4 percentage points year-on-year, which was 4.2 percentage points higher than the same period in 2019, reaching a historical high. Price: Flight Manager shows that in December, the economy class prices including fuel surcharge, and excluding fuel surcharge increased by 0.1% year-on-year, +0.1%, and Ctrip data shows that domestic ticket prices increased by 0.2% year-on-year, while international ticket prices decreased by 11.6% year-on-year (Ctrip's calculation for November was +4.4% for domestic and -5.8% for international), high utilization rates and load factors continuing at high levels have led to an increase in domestic prices. The fleet of six airlines increased by 0.4% month-on-month in December, with more A320 deliveries, and the fleet size increased by 4.0% compared to the end of 2024 in the first twelve months. According to company announcements, as of December 2025, the combined number of managed aircraft for the six A-share listed companies was 3,386, with a net increase of 14 aircraft month-on-month and a cumulative increase of 4.0% since the end of 2024. The fleet size of the six airlines continued to expand in December. Among them, the received aircraft types were mainly A320 series: the six airlines introduced a total of 24 narrow-body aircraft (4 C919s, 4 C909s, 10 A320s, 1 B737, 3 A321neos, 2 B787s). Risk warning: Business travel demand may not recover as expected; sharp increase in oil prices; fluctuations in the exchange rate of the RMB; large-scale flight disruptions caused by aircraft failures.