Changlong Airlines Rushing for Main Board IPO: Holding a Slot-Time Moat, Hard to Avoid Aviation Fuel Pressure?

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Since the listing of China Express Airlines on the A-share market in 2018, there have been no further cases of private airlines going public. During this period, the aviation industry has undergone dramatic market changes such as demand recovery and oil price fluctuations, resulting in increasingly fierce competition within the sector.

Now, this situation may see a breakthrough.

On June 2, Zhejiang Loong Airlines Co., Ltd. (hereinafter referred to as "Loong Airlines") had its main board IPO application accepted by the Shanghai Stock Exchange.

This private airline, which took off from Hangzhou Xiaoshan Airport, is expected to become the first private airline to successfully list on the A-share market in nearly eight years.

As the only regional airline based in Zhejiang, Loong Airlines has deeply cultivated the Jiangsu-Zhejiang region and domestic feeder routes. Its revenue for 2023-2025 was 9.014 billion, 10.009 billion, and 10.648 billion yuan, respectively, while its non-recurring profit attributable to the parent company was 52 million, 337 million, and 490 million yuan for the same period.

Such profitable performance may also be the main reason Loong Airlines is able to be the first to seek an A-share listing.

In fact, leading regional airline Sichuan Airlines also plans to pursue an A-share IPO, but it is expected to remain in the loss phase in 2025.

However, Loong Airlines, now standing at the doorstep of the capital markets, also faces a series of more practical challenges.

With passenger kilometer revenue below the industry average and limited fare transmission capability, the rising jet fuel prices since 2026 may further amplify cost pressures for Loong Airlines.

In this IPO, Loong Airlines plans to raise 2 billion yuan to introduce A320 series aircraft, purchase spare engines, and supplement working capital.

Whether Loong Airlines can be the first to break the eight-year deadlock of private airline listings is now under keen scrutiny.

Slot Moat

Loong Airlines has been planning its IPO for a long time.

In 2021, Liu Qihong, the actual controller of Loong Airlines, revealed in an interview that the company had started preparing for listing as early as 2019 and planned to submit materials in 2021, but due to external factors, estimated preparations would still require two to three years.

Counting from 2019, Loong Airlines’ road to 'A-share listing' has been laid for more than six years.

Actually, the company was not established for long; since its founding in 2011, it has a history of only about 15 years, yet the revenue scale in 2025 has already surpassed 10 billion yuan.

This achievement cannot be separated from the support of local Zhejiang government.

As an economically strong province, Zhejiang has long had robust demand for business travel and air cargo, but more than a decade ago, its local airline network was relatively weak.

Against this backdrop, in 2011 the CAAC and Zhejiang Provincial Government signed the 'Meeting Minutes on accelerating the development of civil aviation in Zhejiang,' clearly outlining increased support for developing base airlines in Zhejiang and promoting Hangzhou Xiaoshan and other airports to enhance their route networks.

Thus opened the policy window. Relying on joint policy from the CAAC and provincial government, as well as Zhejiang’s need to make up for the shortfall in local airlines, Loong Airlines, which originally focused on cargo, expanded its passenger qualification in 2013.

Afterwards, with government support, Loong Airlines became the only comprehensive public transport airline in Zhejiang, based at Hangzhou Xiaoshan Airport, offering both passenger and cargo services.

For airlines, the main base airport is not only the core of operations, but also crucial for gaining access to high-quality slot resources.

Although domestic slot allocation usually follows the historical priority principle, meaning long-term usage and stable operational records ensure some continuity when renewing, incremental slot allocation is clearly tilted toward base airlines, branch airlines, and capable large carriers.

This means that newly established airlines, without a strong main base airport, will find it difficult to obtain ideal slots and will be somewhat weakened in competitiveness.

As a local Zhejiang carrier, Loong Airlines obviously has a strong advantage in acquiring newly added quality slots at Hangzhou Xiaoshan Airport. For example, on Hangzhou-Beijing routes from June 6th to June 8th, Loong Airlines consistently operates the earliest flight at 7:10 am every day.

According to Loong Airlines, Hangzhou Xiaoshan Airport is advancing its fourth phase expansion, and terminal design capacity will be significantly raised to 90 million passengers per year, directly providing ample space and resource guarantee for Loong Airlines to optimize route slot allocation and expand its fleet in the future.

Even so, in terms of overall revenue scale, Loong Airlines still lags behind many regional airlines.

In 2025, Sichuan Airlines, Shenzhen Airlines, and Shandong Airlines will have revenues of 34 billion, 33.406 billion, and 21.159 billion yuan respectively, basically 2-3 times that of Loong Airlines.

From this size, whether Loong Airlines sufficiently fits the main board's 'large-cap blue chip' positioning remains to be tested by the market.

However, in terms of profitability, Loong Airlines still outperforms many peers. In 2025, Sichuan Airlines, Shenzhen Airlines, and Shandong Airlines will all be in a loss-making state, while Loong Airlines’ non-recurring profit attributable to the parent company will reach 490 million yuan.

Such profitability may also be an important foundation for Loong Airlines to initiate a listing push.

Soaring Jet Fuel

With the scarce resource of Hangzhou Xiaoshan Airport as its main base, Loong Airlines mainly operates trunk routes from Hangzhou to Beijing, Guangzhou, Chengdu, Xi’an, Kunming, Chongqing, Urumqi, and other cities.

By the end of 2025, Loong Airlines operated a total of 135 passenger routes, including 115 domestic routes and 20 international/regional routes.

In terms of ticket prices, Loong Airlines' passenger kilometer yield is below the industry average.

In 2025, Loong Airlines’ passenger kilometer yield is 0.41 yuan per person-kilometer, lower than the average of comparable companies at 0.46 yuan per person-kilometer, but relatively close to Juneyao Airlines at 0.44 yuan per person-kilometer.

When sales price flexibility is limited, fluctuations on the cost side will be further magnified.

The biggest uncertainty in Loong Airlines' IPO push comes from the surge in jet fuel prices, which puts pressure on costs.

Since 2026, due to Middle East geopolitical conflicts, especially the Iran situation and risks in the Strait of Hormuz, the international situation has become very severe, and both Brent and WTI crude oil futures once approached $120 per barrel in March.

As of the closing on May 29th, Brent and WTI accumulated increases for the first half of 2026 reached 51.27% and 52.14% respectively.

Against this background, domestic flight fuel surcharges underwent several major adjustments in 2026: on April 5, for routes below and above 800 kilometers, surcharges jumped from 10 and 20 yuan to 60 and 120 yuan (up 5 times); on May 16, they were further raised to 90 and 170 yuan respectively.

For Loong Airlines, jet fuel is the largest single cost item.

From 2023 to 2025, Loong Airlines’ jet fuel costs were 3.159 billion, 3.366 billion, and 3.289 billion yuan, accounting for 39.25%, 37.79%, and 34.26% of its main business costs respectively.

This means that the surge in oil prices since 2026 may bring even more cost pressure to Loong Airlines.

Although a linkage mechanism between fuel surcharges and jet fuel prices has been established domestically to partially hedge against rising oil prices, this mechanism is not a “full pass-through” guarantee. According to regulations, airlines must absorb at least 20% of the oil price increase themselves.

A more practical constraint is that many short- and medium-haul routes such as Hangzhou to Beijing are already facing competition and diversion from high-speed rail. Once fuel surcharges rise, passengers can easily “vote with their feet” and switch to high-speed rail, making it hard for airlines to fully pass on cost increases and causing awkward situations in the industry like “fuel surcharge increases, base fares decrease as substitute.”

For example, the Loong Airlines flight departing from Hangzhou to Beijing at 7:10 am on June 10 has a base ticket price of 307 yuan, a fuel surcharge of 170 yuan, and with airport construction and other fees, total ticket price can reach 575 yuan, which is similar to or even lower than the high-speed rail ticket price before the oil price increase.

With passenger kilometer yield below the industry average and upward pressure on jet fuel costs, whether Loong Airlines can leverage its Hangzhou base resources and route network advantages to turn increased capacity into more stable profitability is closely watched.

Risk Warning and DisclaimerThe market carries risks, investment should be cautious. This article does not constitute personal investment advice and does not take into account individual users’ particular investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their individual circumstances. Investing based on this is at your own risk. ```