UBS: Spring Airlines GCC 2026: Likely Low Single-Digit Rise in Domestic Airfares
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UBS notes that Spring Airlines presented an optimistic outlook at the GCC 2026 conference, highlighting that tight industry capacity should drive low single-digit growth in domestic airfares for 2026. The airline anticipates robust inbound and outbound travel demand. Adjustments to Japan routes are expected to have a manageable impact on annual profits, estimated at approximately RMB 50-60 million. Unit non-fuel costs, however, are projected to increase year-over-year through 2028 due to rising engine maintenance expenses.
Operationally, Spring Airlines expects a net addition of six aircraft in 2026. By pushing daily aircraft utilization rates to 10.6-10.7 hours, the company targets approximately 13% year-over-year growth in available seat kilometers. Demand from individual leisure travelers remains strong, supporting fare increases during peak travel seasons, while corporate travel demand may have already bottomed out. During off-peak periods, the airline will prioritize load factors over pricing stability. Overall, domestic revenue per available seat kilometer is guided to grow by a low single-digit percentage.
Capacity for Japan routes has already been reduced by 40-50%, and the remaining routes maintain healthy load factors and ticket prices. Meanwhile, the Thai market bottomed out in August 2025. UBS maintains a Buy rating on Spring Airlines with a 12-month target price of RMB 61.30. This target is based on a forward price-to-book multiple of 2.9 times applied to a forward book value per share of RMB 20.8.