Domestic aviation companies have successively issued stocks to raise cash. China Eastern Airline recently announced the issuing of 699 million stock shares, aiming at raising 2.29 billion yuan to pay back debts and lower its debt ratio.

In April, Air China announced it would issue 189 million stock shares, raising 1.05 billion yuan. Before that, Hainan Airlines also announced a plan to issue 1.91 billion stock shares for around 8 billion yuan in capital.

A high debt ratio is the general financial state of China's aviation companies. Up to June 30 this year, the debt ratio for China Eastern Airline was 80.51 percent, 72.28 percent for Air China and 72.98 percent for China Southern Airlines.

Profits have dropped in the industry. Figures show that net profits for the three airlines have dropped to 2.5 billion yuan, down 73 percent compared to last year. The high price of aviation fuel is deemed to be the major reason for profit loss.

Fuel costs for Air China was 17.81 billion yuan in H1, increasing by 12.8 percent compared to last year, accounting for 45.23 percent of costs. Fuel costs for China Southern Airline increased by 26.6 percent to 13.38 billion yuan.

Not only passenger transportation, but freight was also faced with losses. "The supply of freight services has been excessive since the beginning of 2011, with the worsening of the European debt crisis, the freight market is also faced with the decrease of demand and price," said the principal of the freight department of China Southern Airline.

Fuel price is not the only reason behind this. According to Zhang Jiangyan, the chief partner of Adfaith, construction of high-speed railways is also challenging the aviation market.

"High-speed railway will reach 16,000 kilometers by 2015. And the impact for the aviation industry will reach its peak by the end of next year," Zhang added.

Though for aviation companies, airline transportation is their central business. Figures show that the world average yield rate is only 0.3 percent per thousand, while subsidiary revenue increased by 43 percent to $32.5 billion in 2011.