China's top three airlines beat Cathay Pacific on traffic growth
Top three carriers show bettertraffic growth than HK flagship airline, and are expected to benefit from the sharp drop in oil prices
The mainland's three biggest airlines - Air China, China Eastern Airlines and China Southern Airlines - reported strong traffic growth last month, outperforming Cathay Pacific Airways.
"The big three airlines' improving operational data for November … is in line with our expectations, while Cathay's weak traffic was below our expectation," Daiwa Capital Markets analysts said in a note.
Revenue passenger kilometres (RPK), which measures the distance flown by paying passengers, grew 19.5 per cent year on year at Guangzhou-based China Southern last month. It was up 13.1 per cent at Beijing-based Air China and 9.1 per cent better at Shanghai-based China Eastern, outpacing their capacity additions for the month.
That compares with RPK growth of just 3.8 per cent at Cathay, where capacity expanded by 5 per cent.
Daiwa said a 13 per cent fall in jet fuel prices last month had helped alleviate cost pressures on the three mainland carriers.
Unlike Cathay, which has hedged more than half of its fuel consumption next year at prices higher than the latest market forecast, the mainland carriers do not do fuel hedging, meaning they are among the biggest winners from the plunge in oil prices in the second half of the year.