Bullish sentiment on aviation as China continues reopening

PETALING JAYA: Despite anticipation of roadblocks ahead, MIDF Research is expecting further recovery in the local aviation industry this year and in 2024.

This will primarily be supported by Capital A Bhd’s AirAsia, the research house said in its latest report.

It added the reactivation of the remaining half of AirAsia Malaysia’s aircraft that have yet to receive airworthiness certificates will lend significantly to the support of the aviation sector in 2023, given that the local low-cost carrier giant historically had a market share of about 40% in terms of passengers carried.

“Nonetheless, we remain wary of the lingering maintenance, repair, and overhaul constraints attributed to the long queues at the facilities, as well as in part due to parts supply chain issues,” .

“Additionally, fleet restoration services are costly, averaging at US$300,000 (RM1.27mil) per aircraft for AirAsia.”

MIDF Research said domestic traffic would be partially lifted by MYAirline Sdn Bhd – the country’s second lowcost carrier – which currently utilise a small fleet of four aircraft to serve eight local destinations.

The Malaysian Aviation Commission (Mavcom) has also forecast MYAirline would be pushing the average monthly domestic traffic closer to a volume of four million.

Seeing more light at the end of the tunnel, the research house pointed out that international tourism will be in the limelight this year as the non-Asean sub segment catches up.

This is especially with respective reopening of sorts occurring in North-East Asia, a region that has collectively contributed about 25% of the international passenger travel volume at the Kuala Lumpur International Airport in 2019, it added.

“More aircraft being reinstated into service as well as the return of foreign carriers should support the strengthening travel demand.

“Eight more foreign carriers have resumed their operations in Malaysia last year, bringing the total operating foreign carriers to 56 out of 68.

“In the longer term, passenger traffic in Malaysia is expected to continue growing as local carriers increase their flight frequencies and introduce new routes, supported by the delivery of their aircraft orders,” it said.The research note also outlined that Malaysia Airport Holdings Bhd’s (MAHB) network of airports concluded 2022 by notching a passenger traffic volume of 6.8 million in December itself, the highest since February 2020 – which was just before the first round of lockdowns hit – translating into a recovery of 68%.

MIDF Research added that the year-end holiday season has also largely supported the notable 31.1% month-on-month growth in traffic for December with the domestic segment being partially lifted by the launch of MYAirline.

“Encouragingly, the 2.9 million volume of international passengers is the highest ever recorded since Malaysia reopened its international borders in April 2022.

“The passengers mix in December stood at 58:42 for domestic and international segments respectively, inching closer to the pre-lockdown mix of about 50:50,” said the research house.