Cross-Border Tourism Recovery Impact on Duty-Free & Airlines: Valuation Prospects

Based on the Beijing Port entry-exit data you provided and the latest market information I obtained, I will systematically analyze the boosting effect of cross-border tourism recovery on the performance of duty-free shops and airlines, as well as the valuation recovery prospects of related sectors from multiple dimensions.

The total number of entry-exit personnel at Beijing Port reached 21.4 million in 2025, a remarkable year-on-year increase of 17.4%, which is a typical manifestation of the full recovery of cross-border tourism. Specifically:

• Foreign entry-exit increased by 34.5%
  , with visa-free entry exceeding 2 million (1.9 times the same period last year), indicating significant effects of the visa-free policy
• Mainland residents’ entry-exit increased by 10.6%
  , with business travel and cross-border tourism demand continuing to be released
• National civil aviation passenger traffic is expected to reach 770 million
  , an increase of 5.4% year-on-year and 16.6% higher than 2019, hitting a historical high [1]
• Load factor steadily improved
  , with civil aviation load factor reaching 84.90% in the first three quarters of 2025, which is already higher than the same period in 2019 [1]

The recovery of international route capacity shows structural characteristics:

• Domestic airlines dominate
  : The market share of domestic airlines increased from 58.9% in 2019 to 69.5% in 2025, and the number of international flights has recovered to 103.6% of 2019 [1]
• China-Europe routes have obvious advantages
  : The capacity share of Chinese airlines on China-Europe routes increased from 55% in 2019 to 77%, mainly due to the ability to fly through Russian airspace, resulting in shorter routes and higher fuel efficiency [1]
• Regional airports perform well
  : Guangzhou Baiyun Airport’s international passengers reached 17.45 million in 2025, an increase of 19.31% year-on-year; Shenzhen Airport’s international and regional passenger volume exceeded 6.3 million for the year, surpassing the historical peak, with foreign entry-exit personnel increasing by 44% year-on-year and visa-free entry of foreign personnel increasing by 133% year-on-year [2]

:

• On December 18, 2025, Hainan Free Trade Port officially launched full-island customs closure operations, and the number of zero-tariff commodity tax items expanded from 1,900 to 6,600, accounting for 74%, an increase of nearly 53 percentage points compared to before customs closure [3]
• Significant effect on the first day of customs closure
  : The island departure duty-free shopping amount reached 161 million yuan, with 24,800 shoppers, increasing by 61% and 53.1% year-on-year respectively [3]
• Sustained popularity
  : Sanya’s city-wide duty-free sales exceeded 100 million yuan for three consecutive days from December 18 to 20, increasing by 45.8%/47% year-on-year on December 19/20 respectively [3]

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The optimized island departure duty-free policy implemented on November 1, 2025 added categories such as pet supplies, portable musical instruments, and micro-drones, included departing passengers in the benefit scope for the first time, and allowed 6 categories of domestic products to enjoy the “sell first, refund later” tax policy. From November 1 to 17 after the new policy was implemented, the island departure duty-free sales amount reached 1.325 billion yuan, an increase of 28.52% year-on-year [3].

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Haikou Customs data shows that Hainan’s island departure duty-free sales in September/October/November 2025 were 1.733/2.425/2.379 billion yuan respectively, with month-on-year growth rates of 3.4%/13.1%/27.1% respectively, and the year-on-year growth rate continued to expand. Among them, the month-on-year growth rate of island departure duty-free sales in September was positive for the first time after 17 consecutive months of year-on-year decline since March 2024, sending a clear signal of bottoming out and rebounding [3].

:

China Duty-Free successfully won the operating rights of the outbound duty-free shop in Terminal 3 of Guangzhou Baiyun International Airport and multiple port duty-free shops such as Mohan, Mengkang, Houqiao, Daluo, and Heihe in the first half of 2025, further strengthening its channel advantages in domestic large international airports and ports. With the recovery of international passenger flow, port duty-free is expected to迎来 accelerated recovery [3].

:

On October 30, 2025, five departments including the Ministry of Finance issued policies to support duty-free shops, supporting port and city duty-free shops to implement domestic commodity tax refund policies, expanding the business categories of duty-free shops, encouraging mobile phones, drones, sports goods and other products to enter duty-free shops, and further optimizing the pick-up mode of city duty-free shops. China Duty-Free and Wangfujing accelerated the bidding for city duty-free shops; China Duty-Free has won bids for city duty-free shops in Shenzhen, Guangzhou, Xi’an, Fuzhou, Chengdu, and Tianjin, and the city duty-free shops in Guangzhou and Shenzhen opened in August 2025 [3].

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China Duty-Free’s market share in the domestic duty-free market reaches 78.7%, and its market share in Hainan’s island departure duty-free market reaches 82%. In the first half of 2025, Hainan’s revenue accounted for more than 53% of the company’s overall revenue [3]. The company owns the world’s largest single duty-free shop, cdf Haikou International Duty-Free City, and the 100-billion-level Sanya International Duty-Free City. On the first day of customs closure on December 18, China Duty-Free’s sales in Hainan reached 250 million yuan, an increase of 90% year-on-year, far exceeding the industry average [3].

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The duty-free business qualification granted to Wangfujing has no restrictions on business types and can engage in island departure duty-free, port duty-free, city duty-free and other projects. Its Wanning Wangfujing International Duty-Free Port successfully opened in early 2023 and is fully promoting the preparation for the opening of Harbin Pacific International Airport Duty-Free Shop [3].

China’s civil aviation passenger traffic is expected to reach 770 million in 2025, about 16% higher than in 2019 [1]. Among them:

• Domestic routes contribute 690 million passengers
• International routes contribute 80 million passengers
  , with a higher year-on-year growth rate

The three major airlines quickly resumed long-haul route operations relying on their完善 hub route networks and transfer capabilities. In the third quarter of 2025, China Eastern Airlines’ international passenger revenue increased by more than 70% year-on-year, and Air China maintained its leading share in the high-end business travel market [1].

:

• The civil aviation load factor reached 84.90% in the first three quarters of 2025, which is already higher than the same period in 2019 [1]
• The average load factor of the three major airlines reached 85.70% in September 2025, an increase of about 5 percentage points compared to the same period in 2019 [1]

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Despite the historical high passenger traffic, the average economy class fare in 2025 was 740 yuan, a year-on-year decrease of 2.9%, continuing the “volume for price” strategy. The average economy class fare in 2024 decreased by 12.7% year-on-year, indicating fierce competition in the domestic market [1].

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In 2025, air passenger demand rebounded sharply, but “volume growth” failed to automatically translate into profit growth of the same magnitude [1]. Financial reports show that Air China’s net profit margin was only about 1.44% in the first three quarters of 2025, meaning only 1.44 yuan of profit per 100 yuan of revenue. The net profit margin of leading airlines is generally only 1%-2%, and the foundation for profit recovery is not yet solid [1].

:

1. Downward pressure on fares
   : Domestic airlines generally adopt the “volume for price” strategy, and the average economy class fare further decreased by 2.9% in 2025
2. High cost pressure
   : High oil prices continue to push up operating costs
3. High leverage burden
   : As of the third quarter of 2025, the asset-liability ratios of the three major airlines are all in the range of 75%-80%, with large-scale fleet leasing and foreign currency debt, and financial expenses and exchange gains and losses have a significant impact on net profit [1]
4. Fierce competition
   : Overcapacity in the domestic market and pressure on fares

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With the further recovery of international routes, stable oil prices, and higher fares in peak seasons, airlines’ profitability is expected to gradually improve. IBA statistics show that the capacity share of Chinese airlines on China-Europe routes has increased to 77% in 2025, far higher than 55% in 2019, and has obvious advantages in pricing and utilization [1].

:

1. Policy dividends from Hainan’s customs closure
   : The scope of zero-tariff commodities has been greatly expanded, and island departure duty-free policies have been continuously optimized, forming long-term policy benefits
2. Continuous recovery of passenger flow
   : Passenger flow at major entry-exit ports such as Beijing Port has hit a new high, and international tourists have increased by 34.5%, providing demand support for duty-free consumption
3. Increase in customer unit price
   : The customer unit price of island departure duty-free steadily increased in the third quarter of 2025, driving the industry as a whole to gradually recover from previous adjustments [3]
4. City duty-free opens new space
   : Policy relaxation helps accelerate the layout of city duty-free shops and open up new growth points

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From the market performance, China Duty-Free has risen by 50% since June 2025, and its stock price has reached a new high in nearly two years [3]. The current static P/E ratio has reached 42.39, reflecting the market’s high expectations for its performance growth [3]. The future trend will highly depend on the rhythm and strength of the actual recovery of performance; if sales recovery is less than expected, the current high valuation will be difficult to maintain.

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With the expansion of the beneficiaries of the “zero-tariff” policy after Hainan’s customs closure, non-licensed retail enterprises can also enjoy system dividends. The final price advantage of duty-free channels will only be reflected in the tax rate difference of about 9% in the retail link (taxable merchants pay 13% VAT, duty-free merchants pay about 4% franchise fee) [3]. The industry’s competitive pattern may change, and China Duty-Free needs to shift from price competition to comprehensive strength competition in brand, scene, and service.

:

1. Continuous improvement on the demand side
   : Passenger traffic hits a historical high, load factor exceeds pre-epidemic levels, and international routes recover acceleratedly
2. Optimization and adjustment on the supply side
   : Capacity growth slows down, and the domestic fleet size only increased by 3.4% in 2025, lower than the expansion rate of ASK [1]
3. Cost side is expected to improve
   : If oil prices can stabilize and decline, the pressure on jet fuel costs will be relieved
4. Policy support
   : Visa-free policies continue to expand, and international route networks recover acceleratedly

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Brokerage views believe that driven by capital inflow and increased number of inbound tourists, the aviation sector is expected to enter an upward channel [4]. However, the recovery path will depend on:

1. Higher fares in peak seasons
   : Airlines need to increase fares in peak seasons to get rid of the “volume for price” strategy
2. Cost control ability
   : Airlines need to strictly control costs to alleviate high oil prices and high leverage pressure
3. Profitability of international routes
   : The increase in the proportion of international routes helps improve overall profitability

:

• Load factor (has recovered to pre-epidemic levels)
• Fare level (still at a low level, need to observe the upward trend)
• Proportion of international route revenue (continuously increasing)
• Net profit margin (currently only 1%-2%, with large recovery space)

:

1. Consumption demand is less than expected
   : Macroeconomic pressure may affect high-end consumption
2. Increased market competition
   : Changes in the competitive pattern after customs closure may weaken price advantages
3. High valuation
   : Current valuation already reflects high expectations; if performance is less than expected, it may lead to stock price adjustments

:

1. Volatile oil prices
   : High oil prices will erode airline profits
2. Demand is less than expected
   : Economic downward pressure may affect travel demand
3. Exchange rate fluctuations
   : Foreign currency debt may lead to exchange losses
4. Overcapacity
   : Fierce competition in the domestic market and pressure on fares

: Hainan’s customs closure policy dividends + passenger flow recovery + customer unit price increase, the duty-free sector has high performance certainty. China Duty-Free as a leader will fully benefit, but the current valuation is not low, so we need to pay attention to the performance fulfillment.

: With the deepening of the zero-tariff policy and the advancement of “simplified tax system” reform, the industry’s competitive pattern may be reshaped. China Duty-Free needs to shift from pure license advantage to comprehensive competition in brand, supply chain, and operational efficiency.

: Passenger traffic hits a historical high, load factor exceeds pre-epidemic levels, and the demand inflection point is clear. However, the “busy but not profitable” phenomenon still exists, and profit improvement needs to observe fare trends and cost control.

: The increase in the proportion of international routes, optimization of fleet structure, and if oil prices can fall, the aviation sector is expected to see profitability recovery. However, high leverage and fierce competition are still restricting factors.

:

• Short-term can focus on trading opportunities brought by the implementation of Hainan’s customs closure policy
• Medium to long-term need to select leading enterprises with brand, supply chain, and operational advantages
• Pay attention to the progress of city duty-free policy promotion and new store opening

:

• Focus on airlines leading in international route recovery (three major airlines, Spring Airlines)
• Pay attention to peak season fare performance and cost control ability
• Focus on the improvement trend of net profit margin; the current net profit margin of 1%-2% has large recovery space

:

1. Continuous verification of entry-exit data at major ports such as Beijing
2. Monthly sales data and customer unit price changes of Hainan’s island departure duty-free
3. Improvement trends of airlines’ load factor, fare, and net profit margin
4. Changes in international route capacity deployment and revenue proportion

Overall, the boosting effect of cross-border tourism recovery on the performance of duty-free shops and airlines is clear, but the duty-free sector needs to pay attention to valuation digestion, and the aviation sector needs to pay attention to the sustainability of profit improvement. The duty-free sector has higher short-term certainty, while the aviation sector has greater elasticity but also greater uncertainty.

[1] Securities Times - “Aviation Stock Problem-Solving: How to Truly Convert Passenger Flow Dividends into Profits?” (2025-12-31)
[2] Sina Finance - “Passenger Traffic Exceeds 180 Million, Ranking First in the Country! The ‘Traffic Code’ Behind Multiple Historical Highs of Guangdong Airports” (2026-01-02)
[3] Kaiyuan Securities - “Hainan Customs Closure Plus Peak Season Dividends, Focus on the Duty-Free Sector” (2025-12-23) and related reports
[4] Wall Street Insights - “Slow Bull to Full Bull… How Will A-Shares Go in 2026? Ten Brokerage Strategies Are Here” (2025-12-30)