Air China's stock price plummeted 5.00% during intraday trading on Monday, leading a broader decline in the aviation sector.

The sharp drop follows the implementation of increased domestic fuel surcharges, the second hike within 40 days, which reached historical highs but are estimated to cover only about one-third of the incremental fuel costs for airlines. Concurrently, Morgan Stanley significantly cut its target price for Air China's H-shares by 23%, from HKD 10 to HKD 7.7, citing that ticket price increases are insufficient to offset cost inflation and removing the stock from its preferred list.

Sector-wide pressure continues as jet fuel prices have surged 17% month-on-month, keeping operating costs elevated. Analysts note that with international oil prices remaining high due to unresolved geopolitical tensions and the industry entering a short-term off-peak season, airlines face significant margin pressure with no immediate positive catalyst in sight.