Core view:
Event: ticket prices and sales in the US aviation market have basically returned to the pre epidemic level. Delta Airlines has announced that it is expected to achieve considerable profits in 2022, and its adjusted total revenue is expected to exceed $50 billion in 2024. As China and the United States are the world’s major aviation markets and the Chinese market is large in scale, we believe that the recovery of the U.S. market can form a more sufficient reference for the future recovery path of the Chinese market.
Since 2021, the international air transport market in the United States has shown a slow recovery trend as a whole. In terms of the pace of recovery, the travel willingness of American passengers has recovered faster than that of other countries, while the recovery speed of American and Chinese air transport market is faster than that of the international market.
In February 2022, the international total passenger throughput recovered to 58% of the same period in 2019, and the recovery of American passenger throughput was higher than that of international total passenger throughput. In July 2021, the passenger occupancy rate of the US China aviation market once recovered to the same level in the same period of 19 years. Although it declined slightly in the second half of the year due to the influence of Omicron mutant, it still remained at the level of 90% in 2019. As of the last week of March 13, the seating rate was basically the same as that of the same period in 2019.
With the lifting of border restrictions, the demand of American air transportation market will continue to increase. In late September 2021, after the US government announced that it would relax inbound travel restrictions in November and lift the travel ban in early November 2021, ticket bookings in Europe and the United States have increased significantly. In December 2021, Omicron spread rapidly around the world, so many countries and regions strengthened epidemic prevention and response measures. Due to the travel restrictions adopted by Omicron, the recovery of international demand slowed down for only about two weeks, and the resilience of the U.S. aviation market in the face of the epidemic continued to increase. In the week ending March 12, the number of air tickets sold was 5% higher than that in the same period in 2019, and the seat rate of American Airlines in China was basically the same as before the epidemic. From the experience of the United States, the lifting of border restrictions is often accompanied by the “retaliatory” surge in international air transport demand.
Ticket prices in the US aviation market have rebounded significantly, with a year-on-year increase over 2019. In the week ending March 12, ticket prices rose by 4% year-on-year in 2019, mainly due to the gradual return of corporate group passengers mainly engaged in business travel and the lifting of entry restrictions in various countries. The sales volume of corporate group passengers has increased steadily in the past six weeks, but it is still far lower than that in 2019.
Supply side recovery continues. From the end of 2020 to March 2022, the number of aircraft fleet increased by 921. It can be seen that the transportation capacity has been significantly improved in 2021, but it has not yet recovered to the transportation capacity level at the end of 2019. The number of aircraft of low-cost airlines has exceeded the level of the same period in 2019, with a year-on-year increase of 4.37% to 1672, which has a significant recovery in transport capacity compared with full-service airlines. Low cost airlines continue to lead the recovery of capacity in the U.S. aviation industry. The expected ASM of loyalty airlines, spirit airlines, Frontier Airlines and mustard Blue Airlines in the second quarter of 2022 is 30.8% / 20% / 18.3% / 10% higher than that in the same period of 2019 respectively.
Full service Airlines Delta Airlines and United Airlines fell 16% and 9.3% in the second quarter of 2022 compared with 2019.
Investment analysis opinion: it is suggested to continue to pay attention to the recovery opportunity of China’s aviation market in 2022. Recommended concerns: Air China Limited(601111) , China Southern Airlines Company Limited(600029) , Juneyao Airlines Co.Ltd(603885) , Spring Airlines Co.Ltd(601021) .
Risk tips: the recovery of epidemic situation in various regions is less than expected, the oil exchange fluctuates sharply, the economic growth is less than expected, and the risk of safety accidents
