A report from Guolian Minsheng Securities indicates that March aviation industry data continues to validate the sector's tight supply-demand dynamics and pricing logic. High international route activity, combined with recovering domestic demand, is driving simultaneous increases in load factors and ticket prices. The focus is on airlines' ability to cover costs following rising oil prices. Both load factors and airfares rose in March, with inbound tourism growth boosting international route load factors. The medium-term logic of tight supply remains unchanged, supporting the transmission of supply-demand gaps into price increases. Ongoing Middle East geopolitical conflicts are keeping international oil prices elevated. The domestic fuel surcharge was raised in April, presenting a pricing pressure test for the industry. Post-oil price increases, industry price competition is moderating, which aids the transmission of tight supply-demand conditions into fare hikes. Monitoring demand feedback following domestic airfare increases is crucial. Key views from Guolian Minsheng Securities are as follows:

Year-over-year growth rates for both supply and demand across the industry improved in March 2026, primarily benefiting from the timing effect of the Spring Festival travel season. Load factors continued their year-over-year increase. Based on company announcements, the combined ASK/RPK for six major airlines in March increased by 10.8%/15.9% year-over-year, with overall capacity growth lagging behind demand growth. Domestically, the six airlines' ASK/RPK rose 11.4%/13.5% year-over-year, achieving a load factor of 86.4%, up 1.6 percentage points. As the latter part of the 2026 Spring Festival period fell in March, a timing effect contributed to the year-over-year improvement in both supply and demand on domestic routes. For the first quarter overall, domestic RPK/ASK grew 7.5%/5.8% year-over-year, indicating demand growth outpacing supply. Internationally, ASK/RPK for international and Hong Kong, Macao, and Taiwan routes increased 9.4%/22.0% year-over-year, with the load factor rising 9.1 percentage points. These routes benefited from growth in inbound passenger traffic and relatively low supply growth, achieving an international route load factor of 88.6%. International ASK/RPK reached 108%/121% of the same period in 2019. For Q1 overall, international RPK/ASK grew 15.5%/9.1% year-over-year, supported by the recovery in foreign inbound tourism and visa-free policy benefits, maintaining high growth rates on international routes.

Aircraft utilization rates across the industry showed high year-over-year growth in March 2026, and domestic airfares rose year-over-year, demonstrating the transmission of tight supply-demand conditions into pricing. Influenced by the Spring Festival timing effect, industry utilization maintained high growth rates on a year-over-year basis in March 2026, with domestic airfares rising concurrently. Utilization data from Flight Master shows the industry-wide aircraft utilization rate was 8.1 hours in March, up 7.9% year-over-year, with wide-body aircraft up 7.9% and narrow-body aircraft up 7.6%. Pricing data indicates industry-wide domestic economy class fares, including and excluding fuel surcharges, both increased approximately 4.7%/4.8% year-over-year according to Flight Master. Data from Ctrip shows domestic airfares rose 3.3% year-over-year in March, while international airfares surged 20.6% year-over-year.

The combined fleet size for the six major airlines increased 0.1% month-over-month in March 2026. By the end of March 2026, the six airlines collectively operated 3,379 aircraft, representing a cumulative increase of 15.0% since the end of 2019. Based on company announcements, the six A-share listed airlines managed a combined fleet of 3,379 aircraft in March, a net increase of 4 aircraft month-over-month, or 0.1%, and a cumulative growth of 15.0% compared to the end of 2019. New aircraft deliveries were primarily Boeing 737 series and COMAC C919 models: the six airlines collectively introduced 5 narrow-body aircraft (2 C919s, 2 B737-8s, 1 A320neo).

Risk warnings include: Business travel demand recovery falling short of expectations; Significant increases in oil prices; Fluctuations in the RMB exchange rate; Large-scale flight groundings due to aircraft malfunctions.