CITIC Securities: Focus on post-holiday customer flow and the potential significant improvement in profit margins by 2026

CITIC Securities research report suggests that during the first 20 days of the Spring Festival travel season, passenger volumes for civil aviation, railways, and highways increased by 5.4%, 4.9%, and 5.4% year-on-year, respectively. Attention is focused on the combined effects of peak passenger flows on the sixth and sixteenth days after the holiday, with an expected civil aviation Spring Festival travel season passenger flow increase of 5.5% to 6.0%. Over the next two months, demand-positive factors are expected to continue emerging, with ongoing emphasis on “major airlines potentially seeing significant improvements in profit statements by 2026.”

The Spring Festival travel data shows three characteristics:

1. Civil aviation passenger growth “starts low and ends high,” with the stimulating effect of secondary travel during the holiday becoming prominent, and post-holiday passenger flow expected to accumulate.
2. Negative factors for Japan routes have basically bottomed out; the reduction in flights is mainly spilling over to Korea and Southeast Asia. The expansion of visa-free policies and the high prosperity of China Travel are expected to continue benefiting airlines. “Flying far, flying internationally, and flying to emerging markets” are expected to contribute to airline revenue through 2026.
3. Spring Festival ticket prices are expected to increase slightly year-on-year, with attention on how subsequent “anti-involution” marginal variables in civil aviation will drive the transmission of high passenger load factors to ticket price elasticity.

Once again, emphasis is placed on “focusing on the profit turning point of airlines,” continuing to recommend airlines with significant cyclical elasticity and higher performance certainty.