Will High Oil Prices End the Civil Aviation "Super Cycle"? The "Macro Derivatives" Play Under the Mismatch of Supply and Demand

What happened? Airline stocks are on another roller coaster ride

If you want to experience a real roller coaster in the capital markets, airline stocks are always first class.

Warren Buffett has repeatedly struggled with airline stocks and left a biting self-deprecating remark: “If you want to become a millionaire, first become a billionaire, then buy an airline.”

Buffett’s joke vividly reveals the “hellish” investment difficulty of airline stocks. As an industry characterized by heavy assets, high operational leverage, high financial leverage, and highly homogeneous products, the business model of airlines is extremely fragile. Their profitability is not only constrained by capacity deployment and price competition within the industry but also constantly exposed to macroeconomic demand, geopolitical-driven oil price fluctuations, and exchange rate movements influenced by the US-China interest rate differential, among many other uncontrollable macro variables.

From August 2025 to February 2026, China’s airline industry seemed to break this curse. Under the support of anti-inflation policies, airline stocks experienced a series of spectacular bullish runs: China Eastern Airlines’ A-shares surged nearly 70%, and China Southern Airlines rose close to 50%. The market was convinced at the time: capacity clearing combined with demand explosion marked the beginning of the “golden decade” for the airline industry.

However, in March 2026, a geopolitical black swan (escalation of US-Iran conflict) struck, with soaring oil prices instantly shattering these optimistic expectations. In just a few weeks, airline stocks collectively plunged from high levels, almost wiping out all gains made over the past half-year.

Did the US-Iran conflict really end this super cycle?

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