Airline stocks in Hong Kong saw another round of declines. At the time of writing, CHINA SOUTH AIR (01055) fell 4% to HK$3.84; CHINA EAST AIR (00670) dropped 2.58% to HK$3.77; AIR CHINA (00753) decreased 1.82% to HK$4.86; and BEIJING AIRPORT (00694) was down 1.15% to HK$1.72.

According to data from Flight Management, for the period of May 15 to May 21, civil aviation passenger volume increased by 6.2% month-on-month but declined by 7.2% year-on-year. Domestic passenger volume specifically rose by 6.1% month-on-month but fell by 8.5% year-on-year. The average domestic airfare (excluding fuel surcharges) increased by 4.4% week-on-week and 5.7% year-on-year, while the domestic passenger load factor decreased by 0.9 percentage points month-on-month and 0.7 percentage points year-on-year. International and regional passenger traffic grew by 7.4% month-on-month and 2.9% year-on-year.

China Merchants Securities noted that under cost pressures, the short-term decline in passenger traffic has widened. Considering the changes in international aviation fuel prices and the existing transmission mechanisms, from a marginal change perspective, short-term aviation fuel costs may have already peaked. From a profitability standpoint, caution is still warranted regarding short-term volatility in oil prices due to geopolitical influences and the potential for mid-term prices to remain at elevated levels, which could erode profits. It is advised to monitor the impact of oil price fluctuations on industry operations and market sentiment within the sector.