Summary of Key Points
The 2026 summer civil aviation market exhibited a phenomenon of "more passengers, but not more revenue": The volume of passenger transportation increased year-on-year (by approximately 150 million people, an increase of 4.4%), and seat occupancy rates rose (to 87.4%, up 1.7 percentage points from last year). However, the average domestic economy class ticket price decreased by 8.4% (to around 719 yuan). This was due to airlines' strategy of "trade price for volume" to maintain seat occupancy rates and market share, coupled with the pressures of rising fuel costs and the competition from high-speed railways, making it difficult to improve profitability. Although inbound tourism was booming, its impact on the overall civil aviation industry was limited due to its small proportion and significant competition from other modes of transport.
1. More Passengers, but Less Revenue: Summer Aviation Traffic Is Busy, but Not Profitable
This summer, there were indeed more people flying—domestic airlines transported 150 million passengers, a 4.4% increase from last year. Domestic routes saw a 4.5% rise, and international routes a 3.1% increase, with seat occupancy rates also rising by 1.7 percentage points to 87.4%, indicating that planes were fuller than in previous years. However, ticket prices were a major deterrent: the average domestic economy class ticket price dropped by 8.4% to 719 yuan. The price decline was most significant in July, gradually recovering in August, and only by the end of the peak season did it barely match last year's levels. In short, although there were more passengers, airlines earned less per person, resulting in a situation that was "busy but not profitable."
2. Why Did Ticket Prices Drop? Fuel Costs and High-Speed Rail Competition Forced Airlines to "Trade Price for Volume"
The decline in ticket prices was not accidental, driven by several key factors:
- High initial fuel surcharges: Fuel surcharges were high at the beginning of the summer season, discouraging passengers from booking flights. It was only after two price cuts that there was a surge in bookings. This led to a higher proportion of ticket prices being covered by fuel costs, while the actual base fare (excluding surcharges) decreased.
- High-speed rail competition: High-speed railways have significantly impacted short and medium-distance routes, providing passengers with cheaper alternatives and making them more sensitive to ticket prices.
- Airlines forced to cut prices to maintain market share: To fill planes and avoid losing market share, airlines resorted to lowering prices. While this increased seat occupancy rates, it also reduced ticket prices.
This strategy also boosted traffic on routes to smaller cities, such as Lishui and Bijie, where ticket sales increased by over 80%. "Travel to smaller cities" became popular, with first-time flyers accounting for a nearly 50% increase in bookings, mostly choosing cities below the third tier due to the lower prices.
3. Difficulties for Airlines: Lowering Prices and Rising Fuel Costs Increase Profit Pressure
Airlines are facing additional challenges:
- Rising costs: The price of aviation kerosene increased by 25% in August compared to July (to 146.35 USD per barrel), remaining at a historic high. Fuel costs are one of the largest expenses for airlines, and this increase has significantly impacted their finances.
- Declining revenue: Lower ticket prices directly reduced revenue. Although the strategy of "trade price for volume" maintained passenger flow, it weakened profits.
Previously, the industry tried to avoid further competition, with the China Air Transport Association issuing self-regulatory guidelines and the Civil Aviation Administration restricting inefficient routes. There were even verbal restrictions on selling tickets for less than 200 yuan, and ticket prices even increased during the Spring Festival travel season. However, the summer season saw a return to the same problematic pattern: rising costs and increased competition, forcing airlines to cut prices again to maintain sales volume, making it even harder to profit.
4. Inbound Tourism Is Booming, but Not Enough to Boost the Civil Aviation Industry
Inbound tourism was indeed strong this year, with many foreign tourists coming to China for the summer (for example, many from Europe due to the heat). Passenger numbers to cities like Kuala Lumpur and Bangkok increased by 30%, and to Singapore by 20%. However, this growth was not significant enough to significantly impact the civil aviation industry:
- Small proportion: The number of inbound passengers (7.06 million, including those returning to their home countries) accounted for less than 5% of the total 150 million passenger volume.
- Competition from other modes of transport: Many inbound tourists from neighboring countries chose land or sea transportation (for example, a 17.8% increase in vehicle crossings), rather than flying.
- International flight capacity not recovering: The volume of international flights this summer was 11.5% lower than in 2019, limiting the industry's ability to accommodate the increased demand.
Hotels and tourist attractions, on the other hand, benefited significantly: Foreign tourists stayed longer (with the proportion of two-night or longer stays rising from 38% to 64%) and spent more on local activities (such as private tours and cultural experiences), resulting in a 250% increase in local spending. However, civil aviation did not benefit much from this growth.
Conclusion
The "more passengers, but not more revenue" situation in the 2026 summer civil aviation market reflects the inevitable choices airlines had to make under the pressure of rising costs and fierce market competition. Inbound tourism has potential, but its impact is limited. In the short term, the dilemma of domestic airlines having to "trade price for volume" is unlikely to change, and they will continue to struggle with profitability. International routes may have room for price increases, but it will take time to return to 2019 levels. For passengers, low ticket prices are likely to continue, but airlines will likely face tough financial times for a while.