This summer has seen a dramatic collapse in air ticket prices.
Relevant data shows that the average booking price for domestic flights departing between July 1st and 7th is nearly 20% lower than the same period last year. A review of ticketing platforms reveals substantial discounts on numerous routes, with some fares slashed by as much as 90%, bringing prices down to as low as 181 yuan—significantly cheaper than high-speed rail tickets for comparable journeys.
Experts point out that behind this summer's airfare plunge, airlines are grappling with a triple pressure: misaligned supply scheduling, consecutive reductions in fuel surcharges on the cost side, and a loosening of pricing power on the demand side. While the price cuts have driven an increase in bookings, this situation is a double-edged sword for airlines, potentially trapping them in a scenario of increased revenue without corresponding profit growth.
In their 2025 financial results, many airlines reported precisely this issue of higher revenue without improved profitability. For instance, Air China Ltd (SHA: 601111) reported a loss of 17.7 billion yuan, and China Eastern Airlines Corp Ltd (SHA: 600115) reported a loss of 16.33 billion yuan. Both carriers have now recorded losses for six consecutive years, with cumulative losses exceeding 700 billion yuan each.
Massive Airfare Cuts: Discounts Up to 90%?
The two-month summer travel period officially began on July 1st and will run until August 31st, spanning 62 days. However, many travelers have noticed that airfares on numerous routes have plummeted during this peak season.
Data indicates the average booking price for domestic flights departing July 1st-7th is down nearly 20% year-on-year. On third-party ticketing platforms, significant discounts are visible on routes between several cities. For example, a ticket from Shijiazhuang to Shanghai costs only 200 yuan, an 87% discount; Tianjin to Shanghai is 290 yuan, an 88% discount; and Beijing to Hangzhou is just 300 yuan, also an 88% discount.
In contrast, opting for a second-class high-speed rail seat on these routes costs significantly more: at least 526 yuan from Shijiazhuang to Shanghai, 529 yuan from Tianjin to Shanghai, and 601 yuan from Beijing to Hangzhou. This means airfares on many routes are now far cheaper than second-class high-speed rail tickets.
Some routes are even cheaper. For example, a flight from Kunming to Chengdu on July 11th costs just 181 yuan, a 90% discount. A ticket from Kunming to Changsha is only 196 yuan, an 86% discount, which can almost be described as rock-bottom prices.
An industry expert explained that the steep drop in airfares at the start of the July travel peak is not merely a "peak-season promotion" but the result of three overlapping pressures.
First, there's a supply-side scheduling misalignment. Most primary and secondary schools concentrated their holidays around July 10th this year, but airlines had already ramped up additional summer flights significantly from early July. With total flight volume and operational rates remaining high, a situation of ample short-term supply meeting delayed passenger flow directly pushed down prices for early July. "Ample short-term supply with客流 not yet concentrated" is the core reason for this price crash.
Second, on the cost side, fuel surcharges have been cut consecutively. Effective July 5th, the surcharge is 50 yuan for flights under 800 km and 100 yuan for longer flights, down nearly 40% from the peak in May. The decline in jet fuel prices has been passed through to ticket fares, combined with airlines proactively lowering prices to compete for高铁客流.
Finally, pricing power on the demand side has weakened. Factors include高铁分流, cautious consumer spending, and later booking decisions. The industry axiom of "booking early is cheaper" has been inverted in 2026. The sharp, last-minute price halving seen on the Shanghai-Osaka route during the Labor Day holiday was a precursor. Airlines are now forced to slash prices close to departure to fill seats.
Bookings Are Up, But Are Airlines Profiting?
The plunge in ticket prices is simultaneously driving a rise in flight bookings.
Data released by a ticketing platform shows that as of June 30th, domestic flight bookings for July exceeded 15.8 million, an increase of about 68% compared to the previous week. Bookings for international and cross-border routes exceeded 4.97 million, up about 17% week-on-week.
However, the expert notes this is not entirely positive news for airlines. While bookings are rising on the surface, the key profitability metric for airlines is revenue per available seat kilometer (RASK), not just load factor. Data shows that from June 22nd to 28th, domestic RASK was 0.448 yuan, down 10% month-on-month and 11% year-on-year—a more severe indicator than simple ticket prices. Furthermore, although jet fuel prices have retreated on the cost side, July prices are still about 3,000 yuan per ton higher than at the start of the year. The longstanding issue of fuel costs constituting 30%-40% of the operating expenses for the three major airlines remains unresolved. Aircraft utilization averaged 8.1 hours per day, down 0.8 hours year-on-year, meaning many aircraft "might incur greater losses by flying."
The expert believes carriers with a high proportion of domestic routes, like China Eastern Airlines and China Southern Airlines Co Ltd (SHA: 600029), face the greatest pressure. Budget airlines might withstand the pressure better due to their high operational周转率. The slow recovery of international routes also fails to compensate for the domestic shortfall. This summer's "fare trough" is a genuine benefit for travelers but represents a necessary "trading price for volume" strategy for airlines. Whether they can recover RASK during the traditional peak in August will determine the color of their third-quarter financial reports.
Looking at the 2025 financial reports, the operating conditions of major domestic airlines remain challenging. Among the three largest carriers—Air China, China Southern Airlines, and China Eastern Airlines—only China Southern Airlines managed to return to profitability, marking its first annual profit since 2020.
Additionally, Air China reported operating revenue of 1.71485 trillion yuan, a year-on-year increase of 2.87%. However, its net profit attributable to shareholders was -17.7 billion yuan, a staggering decline of 646.04% year-on-year. Data shows this was Air China's first significant loss since 2020, extending its loss streak to six consecutive years with cumulative losses reaching 727.24 billion yuan.
China Eastern Airlines reported operating revenue of 1.39941 trillion yuan, up 5.92% year-on-year. Its annual net loss attributable to shareholders was 16.33 billion yuan. Although this represents a significant reduction in losses compared to the previous year, the company remains unprofitable. China Eastern Airlines has also recorded losses for six consecutive years since 2020, with cumulative losses soaring to 754.62 billion yuan.
Comments