The Zhitong Finance App learned that Guotai Junan released a research report saying that the Civil Aviation Administration of China predicts that the 2024 Spring Festival travel season will increase by 9.8% compared to 2019, which is expected to reach a record high. Nine days before the Spring Festival travel season, passenger traffic of civil aviation increased by double digits compared to 2019, exceeding local expectations and taking the lead in reaching a record high. The bank expects strong demand for travel during the 2024 Spring Festival travel season. Among them, aviation passenger traffic is expected to reach a record high during the Spring Festival travel season. Recently, the impact of weather is limited. The market-based ticket price will help increase the price increase beyond the 2023 summer travel season, the Spring Festival travel season, or catalyze improvements in aviation expectations.

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Guotai Junan's views are as follows:

The entire society is in high demand for travel, and the recent weather has affected road passenger flow.

The 2024 Spring Festival travel season began on January 26. It was the first normalized Spring Festival travel season after the epidemic, and the Spring Festival holiday (8 days) was extended compared to previous years. Demand for travel during the Spring Festival travel season was strong, and there was a “family visit+travel fever”. According to statistics from the Ministry of Transport, the total number of people moving across regions in the first nine days of the Spring Festival travel season exceeded 1.75 billion, an increase of 21% over the previous year, and an increase of 3.2% over the same period in the 2019 lunar calendar. Recently, passenger flow growth during the Spring Festival travel season declined due to local freezing rain. Among them, railways and civil aviation were less affected than highways. The first nine days of the Spring Festival travel season compared to the same period in the 2019 lunar calendar, 1) Railways: Passenger traffic increased by 21%; 3) Civil aviation: Passenger traffic increased by 18%; 3) Highways: Passenger traffic increased by 3%, of which the total number of people moving from January 31 to February 3 was slightly lower than the same period in the 2019 lunar calendar; 4) Water transport: Passenger traffic decreased by 50%.

Air passenger traffic: Passenger traffic during the Spring Festival travel season has reached a record high, and recent weather effects have been limited.

The Civil Aviation Administration of China predicts that passenger traffic during the 2024 Spring Festival travel season will increase by 9.8% compared to 2019, and is expected to reach a record high. Nine days before the Spring Festival travel season, passenger traffic of civil aviation increased by double digits compared to 2019, exceeding local expectations and taking the lead in reaching a record high. 1) Before the holiday: Passenger flow started earlier than in previous years and was relatively scattered. Pre-sale progress has accelerated since late January, and industry demand expectations are optimistic. Recently, many places have been affected by freezing rain, and the impact on road passenger flow is greater than that of railways and civil aviation. Recently, the daily passenger traffic of civil aviation has remained high, and the analysis of flying quasi-high-frequency data shows that the month-on-month increase in flight cancellation rates was limited. 2) Mid-holiday: Domestic and international travel demand during the holidays is expected to be better than in previous years, and good pre-sale passenger occupancy rates are expected to guarantee flight operation rates during the middle and low season; 3) After the holiday season: It is expected that various types of passenger traffic such as students returning to school/returning to work/returning from travel/business travel will overlap, and passenger traffic will be concentrated after the holiday season.

Air fares: The market-based effect of ticket prices will be evident, and ticket prices will rise rapidly in the near future.

In 2020, China's civil aviation fare marketization mechanism was basically improved, and marketization has progressed steadily over the past few years. The full fare weighting for the top 100 routes is already about 30% higher than in 2019. Fare marketization will free up room for rising ticket prices during the peak season, which was suppressed in the past, and is also the core driver of the rise in ticket prices in China's aviation industry. The effects of the market-based ticket price in 2023 are initially evident, and it is expected that the 2024 Spring Festival travel season will be further fully demonstrated. Domestic ticket prices have risen rapidly recently, and it is estimated that the current price of pre-sale fuel tickets for the Spring Festival travel season has increased by more than 10% compared to the same period in 2019. Considering the market-based effects of ticket prices and active revenue management by airlines, it is expected that the 2024 Spring Festival travel ticket price will increase compared to 2019 or be better than the 2023 summer travel season.

The Spring Festival travel season is expected to catalyze an improvement in aviation demand expectations and maintain the airline holdings rating.

The aviation logic is not the logic of big profits after the epidemic, but rather the logic of a long aviation super cycle where profit centers rise. Demand for aviation recovered rapidly in 2023, and there was an initial rise in ticket prices. It is expected that aviation demand will remain resilient in 2024, airline capacity will decelerate rationally, international flight increases will drive the recovery of supply and demand, and the profit center can be expected to rise. Capital market expectations may already be too pessimistic, and the 2024 Spring Festival travel season volume and price performance is expected to catalyze an improvement in market demand expectations.

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