Event: in January this year, China’s civil aviation industry continued its recovery momentum. The passenger traffic volume of civil aviation was 29.512 million, an increase of 8.9% month on month, a year-on-year decrease of 2.2%, and recovered to 55.2% in the same period in 2019. The degree of recovery increased by 3.8 percentage points over the previous month; The completed freight and mail transportation volume was 654000 tons, with a month on month increase of 1.1% and a year-on-year decrease of 2.3%, which was 97.3% in the same period of 2019.
In January, the epidemic situation in China was under overall control. During the Spring Festival, although the number of covid-19 cases exceeded the level in the same period last year, the policy of this year was relatively relaxed compared with that of last year, which made the passenger transport volume at the peak of returning home before the festival significantly higher than that in the same period last year (lunar calendar). More flexible and targeted means of epidemic prevention and more sufficient experience in epidemic prevention are the foundation for China to implement accurate epidemic prevention. We believe that through more reasonable epidemic prevention measures than last year, the negative impact of the epidemic on the aviation industry this year will be weaker than last year.
The supply of the three major shipping forces increased, the passenger seat rate decreased slightly, and the high oil price may affect the release of transport capacity: in January, the delivery of civil aviation transport capacity rebounded slightly month on month and year on year, but it was significantly lower than the normal level, and the passenger seat rate decreased slightly. The impact of the epidemic is weaker than last year, but it still can not be ignored. In January, the oil price continued to rise. When the demand was affected by the epidemic, there were restrictions on the transfer of the cost rise caused by the rise of oil price to customers, which would put a certain pressure on the transportation capacity investment and profit of the industry.
In the spring and Autumn period, the delivery of transport capacity and the passenger seat rate increased both, and the data showed a bright performance: it is worth noting that Spring Airlines Co.Ltd(601021) adopted a very positive delivery strategy in January, and the delivery of transport capacity was not only significantly higher than that in the same period last year, but also higher than that in the same period in 19 years. We think this reflects Spring Airlines Co.Ltd(601021) ‘s optimistic prediction for the aviation industry this year. With the significant increase in transport capacity supply, the spring and autumn passenger occupancy rate has also increased slightly month on month. We believe that it is mainly due to the low proportion of business travel and high proportion of private travel of low-cost airlines, which is more sensitive to the demand for returning home than full-service airlines, so it is easier to enjoy the dividend of loose epidemic prevention policies in this year’s Spring Festival. Under high oil prices, low-cost airlines have advantages over full-service airlines in unit fuel consumption due to the characteristics of high seats and high occupancy rate. Their stronger tolerance to the increase of oil prices is also one of the reasons for their better performance in spring and autumn.
The coexistence strategy is not suitable for China, and international freight continues to boom: Recently, some countries announced to stop compulsory epidemic prevention measures and adopt the strategy of “coexistence with the epidemic”. But the recent outbreak of the epidemic in Hong Kong has proved that the coexistence strategy is not suitable for China at least for now. It is clear that it will take time for the international line to be fully opened. International air freight is still booming, and the ton kilometer data of international freight revenue of Juneyao Airlines Co.Ltd(603885) as an indicator is still rising month on month, indicating that the current freight rate can still support the passenger plane that has not changed passenger to cargo to fly cargo charter flights and make profits, and the freight rate is at a high level.
Risk warning: the duration of the epidemic exceeded expectations; Macroeconomic downturn; Changes in civil aviation policies; Geopolitical factors; Large fluctuations in oil prices and exchange rates; Abnormal weather factors, etc.
