Domestic carriers are doing better as the tourism industry entered the traditional peak season and fears over the H1N1 flu are fading. Analysts say the aviation sector is likely to report better performance in the third quarter.
Li Lei, an industry analyst with CITIC China Securities, said, "Boosted by the domestic aviation industry’s revival and seasonal demand pickup, listed carriers’ profit will substantially improve in the third quarter."
Also helping will be the lower cost of jet fuel.
Ma Ying, an industry analyst with CITIC Securities, said, "Major business costs of listed airlines dropped by 11% in the first six months over last year. Among the cost reduction, average jet fuel cost slipped to RMB 4,167 per ton, a fall of 41% from last year."
Major airlines’ interim profit indicated that the domestic aviation market was looking up. The industry made a profit of RMB4.86 billion in the first half, a record high over the last three years. It made an aggregated profit of RMB4.62 billion in the first half of 2008, and a net loss of RMB350 million during the same period in 2007.
Both passenger flow and ticket prices rebounded in the first half. Passenger flow increased by 15% in the first six months compared to a year earlier.
Growing demand has made many agencies cancel deep-discount tickets. According to Michael Peng, a sales manager with Shanghai Business International Travel Service Co Ltd, it was becoming harder to get a discounts of more than 20% on any flight.
China Trade Information reported that there were strong rumors that the top three airlines would receive another round of capital injection from the central government.