Surge of 4 to 7 times! Accelerated rebound in international routes!

The February operating data of the three major airlines, China Eastern Airlines (MU), China Southern Airlines (CZ) & Air China (CA) were released.

On March 15, Air China, China Eastern Airlines and China Southern Airlines disclosed their February operating data one after another. After achieving more than 1-fold increase in passenger capacity in January, the three carriers further accelerated the market recovery in February, with a year-on-year increase of more than 1-4 times. Among them, MU's capacity input even increased by 425.99% year-on-year. In addition, in terms of international passenger turnover, the three carriers also saw a surge, with year-over-year growth of more than 4-7 times.

It is worth noting that the international capacity restoration ushered in the catalyst this month, the Ministry of Culture and Tourism recently announced the second batch of countries to resume outbound group tours on a pilot basis from March 15, and a total of 60 countries have resumed outbound group tour business. The industry expects that with the increase in international flights, outbound flight ticket prices are expected to go down, the outbound travel market is expected to usher in a significant increase in the "Labor Day" holiday and summer vacation this year.

In January, the "explosive growth" has already appeared the beginning. In January, CA, MU & CZ increased their passenger capacity on international routes by 152.1%, 152.21% and 114.26% respectively. However, in comparison, the growth rate of international flight capacity in February was more obvious. The figures for the three companies were 167.4%, 425.99% and 317% respectively. In terms of international flight passenger turnover, these three carriers even increased by 707.3%, 593.4% and 450.98% year-on-year. In January, the year-on-year increase in these figures for the three major carriers ranged from 2-4 times.

It is understood that MU's international and regional routes will resume to 75 in March, adding 8 new routes compared to February and increasing the number of countries and regions involved to 29. And according to the plan, CZ will further increase its international and regional routes to 177 flights per week by April. As of now, domestic routes have returned to 2019 levels and even showed a small increase. According to the latest data, the number of domestic flights on March 9, 2023 was 11,148, recovering to 99.5% of the same period in 2019. And on March 10, the number of domestic flights even increased by 1.3% compared to the same period in 2019.

International airlines have recently received an important catalyst. The Ministry of Culture and Tourism recently announced that starting March 15, travel agencies and online travel companies nationwide will resume operating outbound group travel and "airfare + hotel" services for Chinese citizens to the relevant countries (the second batch) on a pilot basis. The list of the second batch of 40 countries, mainly in the Asia-Pacific region. With the addition of the first batch of 20 countries, the number of countries resuming outbound group tours has reached 60.

In addition, by the recent relaxation of the entry policies of many countries to China, the recovery is expected to accelerate, and the overall restoration is considerable in the long term. For example, Korean airlines' China routes will increase or resume, and Japan Airlines' round-trip flights between China and Japan are expected to resume on a large scale. The industry generally expects that, with the increase in international flights, domestic outbound flight ticket prices are expected to go down, the outbound travel market will usher in a sharp rise in the "Labor Day" holiday and summer vacation this year.

A research paper by Cheung Kong Securities analyzed that, with reference to overseas markets, the demand recovery is ahead of the capacity climb, and the earnings of the airline companies are rapidly repairing, and the mismatch between supply and demand in the aviation industry will gradually appear after the epidemic. The agency said that a new cycle has been in the brewing stage, with the international demand recovery, aviation stocks are expected to usher in a wave of cycle opportunities.