In the Spring Festival travel season of 2025, due to strong private demand, Aviation passenger flow will hit a new high, and after the Lantern Festival, corporate business demand is expected to start well, which may catalyze optimistic expectations for the growth of Aviation demand and the continued recovery of supply and demand profitability.
According to Zhito Finance APP, GTJA has released a Research Report stating that China's Aviation Industry has exceeded expectations in its long-term prospects. The supply and demand trend is expected to continue recovering by 2025. Considering the marketization of ticket prices and a significant slowdown in fleet expansion, the recovery of profits and an upward shift in the profit center can be anticipated. Market expectations for long-term prospects remain low, creating greater room for divergence. During the 2025 Spring Festival travel rush, high demand driven by personal needs will lead to a new record in air passenger flow, and the good launch of business travel after the Lantern Festival is expected to catalyze optimistic expectations for the growth of aviation demand and continued recovery in supply and demand profitability. The report notes that oil prices and Exchange Rates will not alter the long-term value of airlines, possibly providing opportunities for counter-cyclical investments.
The main points of GTJA are as follows:
The demand during the 2025 Spring Festival travel rush is robust, with passenger flow across various modes of transportation reaching new highs.
According to the Ministry of Transportation, during the 2025 Spring Festival travel rush (from January 14 to February 22), the overall inter-regional mobility of people in society exceeded 9 billion person-times, meeting official expectations and setting a new historical high, with a year-on-year increase of 7.1%. Among these, highways increased by 7%, railroads by 6%, and civil aviation by 7%. Compared to the 2019 Spring Festival travel rush, the inter-regional mobility of people increased by 15%, with highways up by 15%, railroads by 25%, and civil aviation by 24%. 1) Before the festival (the first 14 days): The earlier Spring Festival caused a concentration of passenger flow, with a year-on-year increase of 8.8%. 2) During the festival (8 days): Benefiting from the extended holiday and the effect of extended leave, secondary travel surged to fill the traditional low season, with passenger flow increasing by 5.8% year-on-year, continuing the trend of short trips during holidays over the past year. 3) After the festival (the last 18 days): The return flow became dispersed and postponed, coupled with low year-on-year bases due to freezing rain and snow, leading to a year-on-year growth of 6.5% in passenger numbers.
Aviation passenger flow: the passenger flow during the 2025 Spring Festival travel rush reached new highs, with a good start for business travel after the Lantern Festival.
In 2025, China's civil aviation passenger volume during the Spring Festival travel rush exceeded 90.2 million person-times, marking a year-on-year increase of 7.4%, and setting a new record. 1) Low growth due to high baseline during the festival. Both pre-festival and post-festival air passenger flow had a year-on-year growth rate around 8%, while the Golden Week only showed a year-on-year increase of 2%. This indicates strong secondary travel demand during the 2024 festival period. Excluding high bases, the growth rate of passenger flow during the festival is still significantly higher compared to before and after the festival, reflecting that the extension of holidays and the effect of joining holiday time off continue to support strong secondary travel during the festival. 2) High growth in international routes. The year-on-year growth in aviation passenger flow during the 2025 Spring Festival travel rush is mainly contributed by the high growth of international passenger flow, benefiting from the cumulative effect of continuous increases in international flights over the past year. According to flight management data, it is estimated that the number of international passenger flights during the Spring Festival travel rush increased by nearly 30% year-on-year. 3) Good start for business travel after the Lantern Festival.
Aviation ticket prices: In the 2025 Spring Festival travel season, seat revenue experienced a year-on-year decline, while recent bare ticket prices have turned positive year-on-year.
GTJA estimates that the passenger load factor for the 2025 Spring Festival travel season will increase by 1-2% year-on-year, the domestic bare ticket price will decline by about 5% year-on-year due to a high base last year, and the domestic fuel-inclusive ticket price will decline by nearly 10% year-on-year. Among them, the performance of small airlines' seat revenue is better than the industry.
1) Before the festival: Benefiting from the concentration of passenger flow, domestic bare ticket prices remain flat year-on-year, and passenger load factors increase year-on-year; 2) During the festival: Airlines are generally optimistic about secondary travel and actively increase capacity, while the preference for short-distance travel during the holiday continues and High-speed Rail increases frequency, leading to a year-on-year decline in both domestic bare ticket prices and passenger load factors due to a high base; 3) After the festival: The dispersion of passenger flow leads to a continuation of the year-on-year decline in ticket prices, while passenger load factors improve year-on-year. After the Lantern Festival, business activities have started well, combined with the base effect of high ticket prices in Q1 2024 followed by low prices, recent domestic bare ticket prices have turned positive year-on-year. It is a consensus in the industry that ticket prices in 2025 will recover compared to 2024, and the positive trend of bare ticket prices year-on-year is expected to continue. Improved turnover and falling oil prices will help alleviate airlines' cost pressures year-on-year, making Q1 2025 earnings likely to be better than expected.
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