With fuel cheap, demand still strong and seat supply constrained by airport infrastructure, government policies and consolidation, Chinese airlines—at least for the time being—are winners. But China Southern seems a loser among winners. It was indeed profitable in Q2, but its operating margin was just 5% compared to 9% for China Eastern and 14% for Air China. It was alone among China’s Big Three to see margins drop y/y. And China’s Pearl River Delta region, the airline’s most important market, is among the country’s most competitive.
