Airlines stocks led the decline, with AIR CHINA (00753) falling 5.31% to HK$5.17, CHINA EAST AIR (00670) dropping 4.09% to HK$3.05, CHINA SOUTH AIR (01055) declining 3.28% to HK$3.83, and BEIJING AIRPORT (00694) falling 1.3% to HK$3.04 at the time of writing.
On the news front, listed airlines released their July operational data. Dongxing Securities noted that domestic route capacity deployment by listed companies increased 2.3% year-over-year in July and approximately 20.5% month-over-month compared to June. As the industry entered peak season, capacity deployment showed significant month-over-month improvement, though the year-over-year growth rate was not particularly high. Regarding load factors, the overall load factor for listed companies in July improved by about 0.6 percentage points compared to the same period last year, but declined 1.0 percentage point month-over-month from June.
Since the beginning of this year, airline load factors have generally been higher than the same period last year, but the July peak season load factor improvement narrowed to 0.6 percentage points. Combined with the month-over-month decline in peak season load factors, this suggests that this year's peak season demand may be weaker than airlines' expectations. The July load factor performance indicates that industry demand remains difficult to characterize as optimistic.
Huatai Securities pointed out that on August 14, the China Air Transport Association released the "China Air Transport Association Aviation Passenger Transport Self-Regulation Convention," which may reflect the industry's desire to improve operating conditions. The firm believes that while the Convention cannot have mandatory effects, it may marginally improve airlines' operating environment. Overall, the peak season may still see industry sentiment remaining at the bottom due to insufficient business travel demand, awaiting improvement. However, if the industry's revenue management shifts marginally toward pursuing a balance between volume and pricing, airline profitability levels are expected to improve.