Shenwan Hongyuan Group Co., Ltd. released a research report stating that while the recent sharp rise in international oil prices has put short-term operational pressure on airlines, such external shocks do not alter the long-term optimization of the industry's supply-demand structure. Ticket prices have shown resilience even during the April-May off-season. As the peak season approaches, the industry's profit elasticity is expected to be continuously released, presenting a high-quality window for positioning in the aviation sector, for which the firm maintains its key recommendation.

Shenwan Hongyuan's main views are as follows:

**Supply Tightens as Domestic Fleet Growth Slows, Manufacturer Deliveries Yet to Recover** By the end of April 2026, the total number of passenger aircraft in China was 4,265, representing only a 2.8% year-on-year increase compared to April 2025. Furthermore, the fleet count declined month-on-month for two consecutive months in February and March. Factors such as the accelerated retirement of older aircraft and unresolved maintenance issues continue to highlight the tight supply of industry capacity.

Regarding manufacturer deliveries, from January to April 2026, Airbus delivered 136 A320 series aircraft, averaging about 34 per month. This compares to a pre-pandemic monthly average of 60 and a monthly average of 37 during the same period in 2025. During the same period, Boeing delivered 148 B737 series aircraft, averaging about 37 per month, compared to a pre-pandemic monthly average of 45 and a monthly average of 34 in the same period of 2025.

The challenges for wide-body aircraft are more severe. From January to April 2026, Airbus delivered 21 wide-body aircraft, averaging about 5 per month, compared to a pre-pandemic monthly average of 14 and an average of 5 per month in the same period of 2025. During the same period, Boeing delivered 42 wide-body aircraft, averaging about 11 per month, compared to a pre-pandemic monthly average of 21 and an average of 10 per month in the same period of 2025.

**Global Aircraft Manufacturing Supply Chain Bottlenecks Persist, Large Orders Do Not Alter Tight Supply Logic** Recently, Airbus initiated cost-control measures, planning to reduce costs by 10% for its core jetliner business and non-industrial headquarters expenses, including scaling back cooperation with external contractors. These external service providers are crucial for supporting Airbus's capacity expansion. This tightening of outsourcing and expenses comes at a critical juncture as the company strives to ramp up production capacity and improve delivery efficiency.

In Q1 2026, Airbus reported a 7% year-on-year decline in revenue due to engine shortages and supply chain issues, with Pratt & Whitney engines being a core bottleneck limiting A320 series capacity release.

On May 20, the Ministry of Commerce confirmed that Chinese airlines, based on their own development needs for air transport, will introduce 200 Boeing aircraft based on commercial principles. Despite this large order, the current global capacity recovery for both Boeing and Airbus remains limited. Their combined order backlog has further grown to nearly 16,000 aircraft, leading to significantly extended delivery cycles and tight delivery slots.

The number of passenger aircraft in China over 20 years old continues to rise, creating an urgent need for fleet renewal. This new order can only partially offset the capacity gap. The core medium-to-long-term logic of industry supply contraction remains unchanged.

**Off-Season Price Resilience Fully Validated, Peak Season Profit Elasticity Poised for Release** Amid soaring oil prices in 2026, airfares have entered an upward trajectory, maintaining high resilience even during the off-season. This fully validates airlines' strong ability to pass costs downstream to passengers. In April 2026, domestic aviation fuel ex-factory prices began to rise. Concurrently, domestic route ticket prices increased by 12% year-on-year, while international route ticket prices increased by 16% year-on-year. During the May off-season, ticket prices remained elevated, with domestic route prices from May 1 to May 19 up 16% year-on-year and international route prices also up 16% year-on-year.

Notably, passenger acceptance of price hikes has been good. Despite significant fare increases, overall load factors have remained largely stable, confirming that under supply contraction, airlines possess strong cost-pass-through capabilities, and the pricing center has upward momentum.

From the perspective of industry seasonality, aviation exhibits a typical pattern of a stronger peak season. The 2026 Dragon Boat Festival holiday falls on June 19-21, immediately preceding the peak summer travel season. The concentrated release of travel demand from students finishing exams, current students, and families, combined with the low base of summer travel fares in the same period of 2025, is expected to sustain a high growth trend in aviation ticket prices for the 2026 summer travel season. If this is coupled with a trend of declining oil prices, it will further release the industry's profit elasticity.

**Risk Warnings:** Significant rise in oil prices; demand falling short of expectations; rapid currency depreciation; aviation safety incidents.