Asia Pacific Aviation Nowcast: China weakening, Taiwan summer bookings strong

Overview

This report is Bank of America / BofA Securities' 140th 'Asia Pacific Aviation Nowcast,' focusing on high-frequency changes in Asia Pacific air travel. The core conclusion is that regional demand is clearly diverging: Chinese airlines continued cutting flights from May to June, while load factors and fleet utilization weakened; India's domestic traffic rebounded in May but lacked sustainability; Taiwan airlines saw strong summer bookings; and Korean airlines are shifting capacity from domestic to international routes to capture growth in long-haul demand.

Core views

China's aviation demand is the weakest area in the report, with average flight volume down 7.2% YoY in May and down 11.1% YoY in the first week of June. Even though domestic jet fuel prices fell 15% MoM, demand and capacity have not improved meaningfully. Fares still show resilience, but fare growth excluding fuel surcharges slowed from +4.6% YoY in May to +1.1% YoY in early June. India's domestic traffic grew 5% YoY in May but turned negative again in early June, with Air India and IndiGo showing divergent performance. Taiwan airlines are benefiting from summer bookings, supporting revenue trends. South Korea's international demand is stronger than domestic demand, and airlines are cutting domestic capacity while increasing international supply.

Analysis framework

The report uses a high-frequency Nowcast framework, tracking indicators such as flight volume, fares, load factor, fleet utilization, passenger traffic, yield, forward bookings, and seat supply. It then breaks these down across China, India, Taiwan, South Korea, and relevant outbound routes from Japan to assess short-term changes in aviation demand, capacity adjustments, and pricing resilience.

Methodology notes

• High-frequency industry trackingNowcast aviation demand tracking

  Observing changes in demand and capacity through real-time or near-real-time aviation data

  The report uses high-frequency indicators such as flight volume, passenger traffic, fares, load factor, and seat supply to judge whether peak and off-season demand is stronger or weaker than expected.

• Price analysisFares excluding fuel surcharges

  YoY change in airfares excluding fuel surcharges

  This indicator is used to observe underlying fare trends and avoid fluctuations in fuel surcharges masking true demand and pricing power.

• Capacity-demand matchingLoad factor and fleet utilization

  The degree of match between airline capacity deployment and actual demand

  Declines in load factor and fleet utilization hours usually imply weaker demand or the need for further capacity adjustment.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Chinese airlines

  Directly relevant; the report focuses on China's domestic aviation demand, fares, and capacity.

  Strengths

  Fares excluding fuel surcharges are still growing positively.

  Weaknesses

  Flight volume, load factor, and fleet utilization are all weakening, indicating off-season demand is weaker than expected.

  Comparison

  Compared with Taiwan and South Korea's international routes, China's demand momentum is weaker.

  Risks

  If flight cuts continue and fare growth slows further, revenue and earnings recovery could come under pressure.

• Indian airlines / IndiGo / Air India

  The report tracks the recovery in India's domestic and international passenger traffic.

  Strengths

  India's domestic traffic grew 5% YoY in May, and IndiGo performed relatively steadily.

  Weaknesses

  Domestic traffic turned negative again in early June, while YoY declines in Air India's domestic and international traffic widened.

  Comparison

  IndiGo's trend is better than Air India's, and the decline in international traffic has narrowed.

  Risks

  The pace of Middle East flight capacity recovery and weakening June demand could affect subsequent performance.

• EVA Airways / China Airlines

  Directly relevant; the report highlights summer revenue and booking trends for Taiwan airlines.

  Strengths

  Forward summer bookings are strong, with EVA up 20% to 30% YoY and China Airlines up 20% YoY for July-August; April yields also remained resilient.

  Weaknesses

  April traffic growth slowed somewhat, possibly due to holiday timing effects.

  Comparison

  Compared with Chinese airlines, Taiwan airlines show stronger summer demand and booking trends.

  Risks

  If peak summer demand falls short of booking signals, revenue expectations could decline.

• Korean Air

  The report discusses the divergence between South Korea's international and domestic demand and notes that an initiation coverage report on Korean Air has been published.

  Strengths

  South Korea's international traffic grew 8% YoY in May, with strong growth in long-haul demand.

  Weaknesses

  South Korea's domestic traffic fell 7% YoY, and Korean Air cut domestic capacity by 9% YoY in May.

  Comparison

  Korean airlines are shifting from domestic to international routes to capture stronger long-haul demand.

  Risks

  If international demand or load factor improvement slows, the benefits of capacity reallocation may fall short of expectations.

• CX / SIA

  The report's charts mention the percentage of April 2026 passenger traffic recovered versus 2019 levels.

  Strengths

  CX/SIA's April 2026 passenger traffic reached 99%/122% of 2019 levels, respectively.

  Weaknesses

  The main text does not provide detailed earnings or rating analysis.

  Comparison

  SIA's recovery is above 2019 levels, while CX is close to 2019.

  Risks

  Based only on disclosed snippets, there is not enough information for a full assessment of fares, yields, and costs.

Key data

• China average flight volume in May-7.2% YoYThe report states that average flight volume fell YoY in May, indicating off-season weakness.
• China flight volume in the first week of June-11.1% YoYFlight cuts continued to accelerate in early June.
• China domestic jet fuel price-15% MoMDespite lower jet fuel prices MoM, flights and demand remained weak.
• China fare growth excluding fuel surcharges+4.6% YoY in May; +1.1% in early June 2026Fare growth remained positive but slowed significantly.
• China load factor82.3%, -1.2ppLoad factor eased slightly, reflecting softer demand.
• China average fleet utilization6.95 hours, down 0.75 hoursFleet utilization declined after the Labor Day holiday.
• India domestic traffic in May+5% YoYRebounded in May, but turned negative again in early June.
• Taiwan EVA and China Airlines April traffic growth+8% / +1% YoYApril growth slowed somewhat, possibly affected by Easter holiday timing.
• Taiwan EVA and China Airlines April yield5% / 4%Yield remained resilient.
• EVA forward bookings+20-30% YoYSummer bookings were strong.
• China Airlines July-August forward bookings+20% YoYSummer bookings increased significantly YoY.
• South Korea international traffic in May+8% YoYInternational demand remained solid, supported by improved load factors.
• South Korea domestic traffic in May-7% YoYDomestic demand weakened.
• Korean Air domestic capacity in May-9% YoYThe company cut domestic capacity and shifted resources to international routes.

Impact & implications

The investment implication points to regional and airline divergence: in the short term, investors should be cautious on the pace of recovery in Chinese aviation demand, especially as flight volume, load factor, and fleet utilization are all weakening at the same time; Taiwan airlines appear relatively better supported by strong summer bookings and resilient yields; for Korean airlines, the key question is whether long-haul international demand can offset domestic weakness; and in India, it remains important to assess whether the May rebound was only a short-term fluctuation.

Risks

• China's continued expansion of flight cuts may indicate a weaker-than-expected demand recovery.
• Slowing fare growth excluding fuel surcharges may weaken revenue quality.
• After rebounding in May, India's demand turned negative again in early June, creating uncertainty around sustainability.
• South Korea's domestic demand is declining; if international long-haul demand is insufficient to offset it, overall capacity efficiency will be affected.
• The report discloses investment banking and research conflict-of-interest reminders, which investors should treat as only one reference factor.

What to watch

• Whether China's June and summer flight volume, load factor, and fleet utilization continue to decline.
• Whether China's fares excluding fuel surcharges slow further from positive growth or turn negative.
• Whether India's June domestic traffic weakness persists, and the progress of Middle East capacity recovery.
• Whether EVA and China Airlines' forward summer bookings convert into actual traffic and yields.
• Whether growth in international route supply by Korean Air and other Korean airlines leads to higher load factors and revenue.
• The recovery of Japan, China short-haul, and long-haul outbound capacity relative to 2019 levels.