Sealand: Air cargo peak season approaching; passenger ticket prices recovering and rebounding in early October

Sealand released a research report stating that in air cargo, current global cross-border airfreight demand remains robust, with cargo and mail volumes still maintaining steady growth despite high oil price pressure; on the supply side, new aircraft delivery cycles are lengthening, and net capacity growth in the industry is limited. Under this supply-demand setup, freight rates are expected to remain stable; meanwhile, as the Q4 airfreight peak season approaches, cross-border airfreight demand is expected to continue growing, and if oil prices subsequently decline, profits could be further enhanced. In air passenger transport, fuel-inclusive ticket prices recovered year-on-year in September-October, with attention on Q4 industry supply-demand improvement. As travel demand picks up, supply and demand have improved somewhat, and industry fuel-inclusive ticket prices continued to recover positively year-on-year from August to October, possibly signaling that the industry is poised for sustained profit improvement. Looking ahead, industry supply may remain persistently tight, and the bank is bullish that with steady demand growth, ticket prices are expected to continue recovering and airline profits may grow. In summary, the "Recommended" rating on the air transport industry is maintained. Sealand's main points are as follows: Cargo: Volume growth gradually slowing, freight rates maintaining year-on-year growth 1) International cargo volume growing steadily, with year-on-year growth slowing. According to the latest August 2026 industry data released by the Civil Aviation Administration, total civil aviation cargo and mail turnover in August rose 5.4% year-on-year, with domestic/international cargo and mail turnover at -7.0%/+8.7% year-on-year respectively. For the cumulative January-August period, total civil aviation cargo and mail turnover/domestic/international turnover rose 11.0%/-2.0%/+14.5% year-on-year respectively. 2) Q3 freight rates fell sequentially but rose 21% year-on-year. According to the TAC airfreight rate index, the average Shanghai airfreight price index in 2026Q3 fell 8.9% sequentially and rose 20.9% year-on-year, with July/August/September up 23.8%/20.7%/18.9% year-on-year respectively, with growth slowing month by month. In the first two weeks of October (through October 12), the average Shanghai airfreight price index edged up 0.4% versus the full-month September midpoint, and the monthly average rose 15.0% year-on-year versus the full-month October last year midpoint. Passenger: Fuel-excluding ticket prices turned positive in early October; crude oil prices remain high 1) Industry supply and demand: Industry average load factor exceeded 88% in August. According to the latest August 2026 industry data released by the Civil Aviation Administration, industry ASK/RPK rose 4.8%/6.4% year-on-year respectively in August, with the load factor reaching 88.8%, up 1.3pct year-on-year and up 2.2pct versus the same period in 2019. Domestic/international turnover rose 5.9%/8.3% year-on-year respectively. Based on the combined September operating data disclosed by the six major airlines (Air China Limited, China Southern Airlines, China Eastern Airlines Corporation, Spring Airlines, Juneyao Airlines, Hainan Airlines Holding), the six airlines' September ASK and RPK rose 5.1% and 5.8% year-on-year respectively, with the load factor reaching 86.4%, up 0.6pct year-on-year. Among them, domestic/international and regional ASK rose 3.3%/9.4% year-on-year respectively, with corresponding RPK up 3.9%/10.7% year-on-year, and corresponding load factors of 87.8%/83.4%, up 0.5pct/0.9pct year-on-year respectively. 2) Ticket prices: Fuel-excluding ticket prices turned positive year-on-year in the first half of October. From early October to October 15, 2026, the average fuel-inclusive economy-class ticket price on domestic routes rose 8.9% year-on-year, with the gain widening versus September's year-on-year gain; fuel-excluding ticket prices rose 1.2% year-on-year, turning positive; industry supply and demand improved, and ticket prices continued to recover. From January 1 to October 15, 2026, the average fuel-inclusive economy-class ticket price on domestic routes rose 6.6% year-on-year, while fuel-excluding ticket prices fell 1.0% year-on-year. 3) Oil and FX: Brent prices remain high; domestic jet fuel prices rebounded. On oil prices, crude oil prices basically held at a high level of around US$100 in September-October 2026; from early October to October 15, the average Brent price reached US$103.5/barrel, up 61.9% versus the full-month October 2025 average midpoint, with the crude price gain continuing to widen versus September's gain. On jet fuel prices, the October jet fuel price continued to rebound sequentially to 8,946 yuan/ton, with the year-on-year gain widening to +58.8%. On FX, at end-2025, the central parity USD/CNY rate was 7.029. As of October 16, 2026, the central parity USD/CNY rate was 6.722, down 4.36% from end-2025 and down 0.19% from end-2026Q3. The three major airlines mainly added international capacity in September 1) Operating conditions: For the month, September 2026 entered the slack season; except for Hainan Airlines Holding, all airlines' capacity (ASK) continued to grow year-on-year, with Spring Airlines and Juneyao Airlines posting year-on-year growth of over 10%; among them, the three major airlines (Air China Limited/China Southern Airlines/China Eastern Airlines Corporation, same throughout) mainly added capacity on international routes, while Spring Airlines and Juneyao Airlines mainly added capacity on domestic routes. On load factors, all airlines' domestic load factors in September were above 86%. On a cumulative basis, from January to September, Spring Airlines' total ASK grew 13.0% year-on-year, while all other airlines grew within 5%. On load factors, airlines' domestic and international load factors were at high levels; except for China Southern Airlines, whose load factor declined slightly year-on-year, all other airlines saw year-on-year increases in both domestic and international load factors, with Air China Limited posting the most notable increase of 3.9pct year-on-year. 2) Fleet introduction: In September 2026, Air China Limited, China Southern Airlines, China Eastern Airlines Corporation, and Hainan Airlines Holding introduced 1, 6, 5, and 1 passenger aircraft respectively, while Spring Airlines and Juneyao Airlines introduced no aircraft and retired none; the six major airlines had a combined net increase of 2 passenger aircraft. For the cumulative January-September period, the six major airlines had a combined net increase of 44 passenger aircraft. Risk warnings: geopolitical risk, macroeconomic volatility risk, travel demand growth falling short of expectations, industry supply exceeding expectations, ticket price increases falling short of expectations, intensifying market competition risk, sharp oil price rise risk, sharp RMB depreciation risk, and earnings forecast risk.