Shenwan Hongyuan Group Co., Ltd. has released a research report indicating that global revenue passenger kilometers (RPK) fell 2.4% year-on-year in Q2 2026, marking the first quarterly decline since the pandemic, with passenger traffic significantly impacted by geopolitical conflicts. Looking ahead to Q3, aviation capacity growth is expected to recover, with globally scheduled seats projected to increase 3.1% year-on-year. The oil price shock does not alter the long-term optimization of industry supply-demand dynamics; with demand improving marginally in August and oil prices declining quarter-on-quarter, industry profitability is set to improve, suggesting investors should focus on bottom-fishing opportunities.

From a global perspective, geopolitical conflicts have severely impacted the aviation industry, with Q2 passenger demand turning negative. Global RPK decreased 2.4% year-on-year in Q2 2026, the first quarterly contraction since the pandemic, as passenger traffic was heavily affected by geopolitical tensions—including disruptions to Middle East route operations and a sharp surge in jet fuel prices. Available seat kilometers (ASK) fell 2.1% year-on-year, with capacity contraction occurring at a relatively slower pace, while the passenger load factor (PLF) declined 0.3 percentage points year-on-year to 83.5%.

By region, Latin American and Caribbean carriers posted the strongest RPK growth at 4.3%, followed by Africa at 3.4% and Europe at 1.1%, both maintaining positive growth. Asia-Pacific and North American carriers each saw RPK decline 0.5% year-on-year, both turning to negative growth. Middle Eastern carriers suffered the most severe impact, with RPK plunging 30.1% year-on-year and load factor dropping sharply by 6.3 percentage points to 74.4%, the largest decline among all regions. For Q3, capacity growth is expected to revive, with global scheduled seats projected to rise 3.1% year-on-year, led by Africa at 8.7%, Europe at 4.7%, and Asia-Pacific at 3.5%.

In the U.S. market, soaring oil prices have triggered supply clearance, leading to notable divergence in carrier profitability. From January to July 2026, U.S. jet fuel prices rose 3.8 times faster than airfare increases, prompting carriers to significantly cut Q2-Q3 capacity growth expectations, with Spirit Airlines filing for bankruptcy in May due to cost pressures. The four major U.S. carriers showed divergent Q2 2026 operating data, with revenue per passenger mile growing 12%-15% year-on-year through fare pass-through. Profitability varied dramatically: Southwest Airlines' net profit rose 9% year-on-year, benefiting from a low base of 3.1% last year and initial results from its transformation strategy, while American Airlines, Delta Air Lines, and United Airlines saw net profits decline 88%, 25%, and 17% year-on-year, respectively. In terms of operating margins: Delta Air Lines at 9.4% led, followed by United Airlines at 6.2%, Southwest Airlines at 3.4%, and American Airlines at 2.7%, with Delta's leadership driven by its diversified business moat.

In the European market, flight volumes grew but at a slower pace, with geopolitical conflicts and oil price shocks intensifying profitability pressure on carriers. During weeks 1-33 of 2026, average daily flight volumes in Europe rose 1.4% year-on-year, with popular tourist destinations and low-cost carriers leading in flight growth. However, geopolitical tensions caused Q2 oil prices to surge, and major carriers' Q2 2026 profits diverged notably: Lufthansa, IAG, Ryanair, and Air France-KLM saw net profits decline 88%, 35%, 34%, and 71% year-on-year, respectively, compared to Q2 2025.

In Asia's major aviation markets, Japan and South Korea continued to see passenger traffic growth, while setbacks at Middle East hubs led to a redistribution of transit traffic. Since the start of 2026, passenger volumes in markets such as Japan and South Korea have maintained year-on-year increases and have surpassed pre-pandemic levels. Due to high oil prices, some markets saw air passenger traffic decline in Q2 2026, with Thailand's AOT airport group and South Korean civil aviation passenger volumes changing -4% and +5% year-on-year, respectively. Transit hub performance diverged: Hong Kong airport's passenger traffic grew 9% year-on-year, benefiting from both its own demand growth and spillover effects from Middle East hubs.

Risk warnings: demand growth falling short of expectations; significant oil price increases; sharp depreciation of the RMB exchange rate; aviation safety incidents.