Aviation stocks declined collectively. As of press time, CHINA SOUTH AIR (01055) fell 4.93% to HK$3.86; AIR CHINA (00753) dropped 4.34% to HK$5.29; CHINA EAST AIR (00670) declined 2.6% to HK$3.00; BEIJING AIRPORT (00694) fell 1.43% to HK$2.75.

A research report indicated that business travel demand showed year-over-year recovery growth in April-May, with good supply-demand recovery ensuring airlines retained most fuel cost reductions during the off-season, leading to significantly reduced losses year-over-year in Q2. However, business travel demand unexpectedly weakened in July-August, preventing the summer travel season from demonstrating profit elasticity. Notably, under pressure from reduced business travel demand, ticket price declines offset oil price drops, with estimates showing airlines' summer travel profits still growing year-over-year.

The report pointed out that compared to the October Golden Week, it is more advisable to focus on two aspects: After important meetings in October, closely observe the recovery of business travel demand. September's robust business travel demand preliminarily validates that the unexpected summer weakness may be a periodic impact. If business travel demand recovery is further validated as sustainable, airlines' profit center is expected to begin significant upward trajectory in 2026.

Chinese airlines are predominantly state-owned central enterprises, making anti-involution worth anticipating. The Civil Aviation Administration of China is expected to continue strictly controlling slot growth during the 2025/26 winter season, and off-season low-price management will help airlines continue significantly reducing losses in the short term, ensuring full-year turnaround to profitability in 2025, while guiding airlines' revenue management improvement and accelerating profit growth in the medium term.