HK Stock Market Move | Aviation stocks continued to decline, with April jet fuel prices rising by 75% month-on-month. Morgan Stanley pointed out that it will be difficult for ticket price increases to cover the rising costs.

Aviation stocks continued to decline. As of press time, China Eastern Airlines (00670) fell by 3.81% to HK$3.79; Air China Limited (00753) fell by 3.61% to HK$4.81; China Southern Airlines (01055) fell by 3.16% to HK$3.98; CATHAY PAC AIR (00293) fell by 0.81% to HK$12.28. On the news front, it was reported that ticket agents had received notices from airlines that domestic fuel surcharges were planned to be raised starting from May 16th. Industry pointed out that the US-Iran conflict led to a 75% increase in April aviation fuel ex-factory prices month-on-month, with a 500% fuel surcharge increase, far exceeding the impact of the Russo-Ukrainian period. The rapid rise in fuel costs is difficult to pass on, and major global airlines are all taking countermeasures by reducing flights to combat high oil prices. Morgan Stanley released a research report stating that the current ticket price increases are insufficient to cover rising costs, indicating that short-term profit margins will be under pressure and demand will also be affected by rising ticket prices. The bank's base case scenario predicts that aviation fuel prices will normalize to $100 to $110 per barrel by the end of 2026, delaying the aviation industry's upturn cycle, and is expected to recover by 2027.