In the past two to three years, aviation stocks have remained at historical valuation lows due to the effects of the pandemic and the stagnation of international routes. However, with the recent rally in aviation stocks, this "value trap" seems to be undergoing a notable recovery. Since October 9th, the Hong Kong aviation sector has been steadily climbing. During the periods of October 9, 15, and 20, the sector recorded increases of 3.47%, 5.68%, and 5.38%, respectively, leading to a cumulative gain of 15.14% to date. Notably,
The aviation sector is experiencing a robust recovery, raising the question: what is driving this trend? The increase in passenger volume and the recovery of ticket prices indicate a significant improvement in the industry's prosperity. Notably, the combination of the National Day and Mid-Autumn Festival holidays, along with the convenient "leave-sharing" methods, has greatly boosted travel intentions. According to data from the Ministry of Transport, the total inter-regional personnel flow from October 1 to 8, 2025 (National Day and Mid-Autumn holiday) is expected to reach 2.432 billion, marking a historical high for the same period, with a daily year-on-year increase of 6.2%. The civil aviation passenger volume during this period totaled 19.138 million, with a daily average of 2.392 million, representing year-on-year increases of 4.1% and 26.9% compared to 2024 and 2019, respectively.
Guosheng Securities noted that the record-high holiday travel data, along with the year-on-year increase in civil aviation passenger volume, highlights the resilience of civil aviation demand. In terms of flight numbers, as of October 14, 2025, the daily execution of civil aviation flights was 15,539, compared to 14,980 in the same period of 2024, reflecting a year-on-year increase of 3.73%. Passenger load factors for July to September 2025 were 84.5%, 87.5%, and 85.8%, all exceeding the load factors of the same period in 2019; in September 2025, the average load factor for the three major airlines reached 85.7%, a 5-percentage-point increase compared to 2019, performing better than the industry average.
Examining the breakdown of flight structures, there has been a significant increase in international flights and flights to Hong Kong, Macau, and Taiwan. As of October 14, 2025, the average daily execution of civil aviation international and flights to Hong Kong, Macau, and Taiwan was 2,154, reflecting a year-on-year increase of 16.70%; domestic flight execution averaged 13,885 daily, a 1.91% year-on-year rise. As the visa-free travel scope continues to expand, the demand for international travel and exchanges is being increasingly activated. By the end of June 2025, international flight volumes had recovered to 88% of the same period in 2019.
As flight numbers continue to rise, passenger load factors have improved steadily, and ticket prices have shown consistent recovery. In September 2025, the average inclusive tax price for domestic economy class tickets in civil aviation was 697 yuan, an increase of 0.6% year-on-year, compared to a 5.0% decrease from September 2019; during the National Day and Mid-Autumn holiday, the average price rose to 849 yuan, a year-on-year increase of 0.3%, and a 1.4% decrease compared to the same holiday in 2019, indicating a sustained ticket price recovery.
As demand surges, breathing new life into the aviation industry, oil prices may enter a downward cycle, which could further enhance industry profitability. As of September 2025, OPEC+ has fully exited its early 2024 production cut agreement of 2.2 million barrels per day after five months of increased production. On September 7, eight major oil-producing countries within OPEC+ decided to further increase output by 137,000 barrels per day starting in October, indicating that the organization has initiated its second phase of production increases, corresponding to about 1.66 million barrels per day in cuts originally set to expire at the end of 2026. In the first nine months of 2025, China's aviation kerosene import price averaged 5,713 yuan per ton, up 13% year-on-year. Brent crude oil prices stood at $65.50 per barrel on September 5. As major producing countries ramp up, oil prices may continue to decline, which is likely to reduce the unit fuel cost for airlines, facilitating profitability.
Based on these insights, it is clear that multiple factors are contributing to a significant improvement in the aviation industry's prosperity, which is also creating a positive feedback effect on the secondary market. The aviation industry may be entering a "super cycle," with all conditions in place, requiring just the right catalyst. In the short term, exceeding expectations for the National Day holiday data clearly confirms the resilience of industry demand, but in the medium to long term, the aviation industry may initiate a "super cycle-long logic."
On one hand, the supply-demand imbalance is creating long-term support. From the demand side, the optimization of demand structure is key. Specifically, against the backdrop of consumption upgrades and experiential consumption development, the proportion of leisure travelers has significantly increased, enhancing their resilience to economic cycles. Simultaneously, the demand for business travel is gradually recovering, with domestic business travel passenger volume increasing continuously on a quarterly basis in Q3 2025, driving ticket prices upward.
In the long term, China's per capita air travel frequency was only 0.47 as of 2019, less than one-fifth of that in the U.S. The ongoing urbanization and consumption upgrades will continue to unleash demand potential, with per capita air travel frequency expected to reach 0.8 by 2030, corresponding to an annual passenger volume growth rate of 6.5%. On the other hand, supply constraints are difficult to resolve. Supply-side challenges include slow recovery of global aircraft manufacturing capacity, with Airbus and Boeing's 2025 capacity only at 60%-70% of 2019 levels, leading to a backlog of 17,000 orders, while the average delivery waiting time for Chinese airlines has extended from two years to 3.5 years. Domestically, the expected average annual growth rate for passenger transport capacity from 2025 to 2028 is only 3.1%, significantly lower than the 8.5% during 2010-2019, primarily hindered by insufficient new aircraft (averaging less than 120 per year) and the retirement of old fleets (an estimated 300 retirements over the next five years).
Moreover, airspace and slot bottlenecks, along with "anti-involution" industry self-discipline, further restrict supply release. The Civil Aviation Administration's tight control over slot growth for the 2025/26 winter season will continue to optimize the supply-demand structure. Additionally, market-oriented reforms and industry self-discipline have also activated the profitability elasticity of the aviation sector. Following the fare reform in 2017, airlines have seen a significant increase in pricing power. Against a backdrop of high load factors, domestic trunk ticket prices have also experienced year-on-year increases since 2025.
According to Xindai Securities, the industry’s oil deducting ticket prices turned positive year-on-year during the National Day and Mid-Autumn Festival holidays; ticket prices continued to stabilize in early October. Entering a seasonal low period dominated by business travel in Q4, there could be a notable year-on-year improvement given the low base from last year, which will drive continuous recovery in airline revenue per seat. With the implementation of "anti-involution" measures and the new regulations, the phenomenon of malicious low pricing within the industry is expected to decrease, further propelling ticket price recovery and bolstering airline revenue per seat. Combined with the declining costs due to lower oil prices, airline profitability is expected to increase further.
Notably, Guotai Junan Securities estimates that if business travel demand continues to rebound, the profitability midpoint for airlines will rise significantly, with Q3 2025 profits likely to exceed those of the same period in 2019, preliminary indicating an upward cyclical trend. This has resulted in the mainstream acceptance of the "super cycle long logic" in the aviation industry. Institutions such as Guotai Junan and Zhongtai Securities believe that China's aviation sector has met the conditions for initiating a super cycle: the market-driven pricing guarantees the transmission of high passenger load factors into ticket prices, the slowdown in fleet growth eases pressure from investments in second- and third-tier markets, and recovering business travel demand sustains the upward trajectory of airline profitability. International investment banks like Goldman Sachs and Citigroup have upgraded ratings for leading airlines, citing persistent supply constraints until 2027 as the core driving factor for rising ticket prices.
In conclusion, it is evident that China's aviation industry is currently undergoing a "high demand, low supply, strong policy" resonance cycle, and the conditions for the start of a super cycle are almost in place. From 2025 to 2028, the supply-demand imbalance is expected to continue expanding, with simultaneous increases in ticket prices and load factors driving the realization of airlines' profitability elasticity. The industry is likely to transition from a "strong cyclical fluctuation" phase to a "supply-demand-driven profitability stability period." Investors should pay attention to full-service airlines (such as Air China and China Southern Airlines) for their hub advantages and international route flexibility, as well as low-cost carriers (such as Spring Airlines) for their low-cost and high-turnover models.