In the operation of airlines, its fixed cost is quite high. Once the plane takes off, the cost will occur and be relatively fixed, and the passenger load factor becomes the key to the airline's profit. Since it is impossible to effectively reduce the fixed cost, airlines try their best to increase the passenger load factor, which naturally leads to a price war.
However, the current situation of China's aviation industry seems to be different. On the one hand, the domestic aviation industry is relatively concentrated and is a typical oligopoly competition. Everyone knows the harm of price war, and it is easy to form price collusion; On the other hand, due to the increase of per capita income and the appreciation of RMB, people's demand for aviation industry is increasing.
In the case that the overall trend of the industry is improving and the performance of airlines is generally not as good as before, high fixed costs can bring greater flexibility to the performance of airlines, which is manifested in the amazing growth rate of net profit. At the same time, the high asset-liability ratio of most domestic airlines will also become an important driving force to push up the rapid growth of their return on net assets at this time.