16 October 2019
Passenger traffic at Malaysia Airports Holdings Bhd’s (MAHB) airports in Malaysia are still favourable despite travel disruptions brought on by the haze problem last month.
According to the research team at MIDF Amanah Investment Bank Bhd (MIDF Research), domestic traffic at Malaysian airports recorded a staggering growth of 10 per cent year-on-year (y-o-y) in the first nine months of 2019 (9M19) to hit 38.6 million passengers.
“Following the Aidilfitri holidays in June, travel demand in 3QCY19 remained strong; (driven by) a series of three long weekends in September 2019 and the Aidiladha and the national day holidays in August.
“The haze which occurred in the middle of September appeared to have no impact to the travel sentiment. Looking ahead, the consolidation in domestic traffic is expected to continue at least until 1QCY20 as airlines shift capacity from the international to domestic sector,” it said.
International traffic at Malaysian Airports also grew at a measured pace of 2.2 per cent y-o-y to hit 39.4 million passengers in 9MCY19.
It noted that the international passenger traffic of 13.4 million recorded in 3QCY19 was also the highest ever recorded on a quarterly basis.
“Besides the series on long weekends, the 3.3 per cent y-o-y growth in international traffic during 3QCY19 partially came from the Hajj movements in August 2019.
“It also proved that the haze in September 2019 did not adversely impact travel demand. We believe that North Asia (China, Taiwan and Korea) likewise supported international traffic in September due to the mid-Autumn festival,” it explained.
MIDF Research pointed out that although growth in the domestic sector outpaced the international sector for 9MCY19, international passenger movements continued to retain slightly more than 50 per cent of the passenger mix.
“Latest international route additions include Malaysia Airlines’ flights from Kuala Lumpur to Pekanbaru and Solo which commenced in mid-September 2019 while Indonesian carrier, Citilink started flight services from Pekanbaru to Kuala Lumpur in late September 2019.
“Moving forward, we expect international traffic for Malaysian operations to be supported by incoming addition of frequencies routes and also airlines.
“For instance, Turkmenistan Airlines will begin operating flights between Kuala Lumpur and Ashgabat from December 2019 while Uzbekistan Airways will be introducing a third flight beginning from mid-December 2019 under its Tashkent-Kuala Lumpur services which replaced the triangle routing with Jakarta,” it added.
Meanwhile, the research team said, passenger traffic growth in klia2 exceeded KLIA Main Terminal by 4.2 per cent y-o-y compared with 2.2 per cent y-o-y growth seen in KLIA Main Terminal, mainly driven by the 6.9 per cent growth in the domestic traffic during the same period.
“On the international front, passenger traffic for Asean countries in klia2 grew by 5.4 per cent y-o-y and 6.6 per cent y-o-y in 9MCY19 and 3QCY19 respectively,” it added.
“Hence, we opine that AirAsia Group Bhd (AAGB) will continue to record commendable operational statistics for 3QCY19,” it said.
Although the growth of international passengers beyond Asean for klia2 declined by 0.6 per cent in 9MCY19, MIDF Research believed that this would change as routes operated by AirAsia Bhd (AAX) especially from Kuala Lumpur to Fukuoka, which started in 1QCY19 and is expected to mature as the 2020 Tokyo Olympics gets closer.
“Moreover, we view AAX’s new service from Kuala Lumpur to Narita, Tokyo beginning in late November 2019 on top of its existing flights to Haneda, Tokyo will serve to further strengthen AAX’s position as one of the largest airlines in Japan’s emerging medium/long haul market,” it added.
As for the impact of the departure levy, MIDF Research believed that it could negated by Visit Malaysia Year 2020 (VMY2020) campaign.
It said, it continued to believe that the impact of the departure levy will be negated by robust travel demand heading into VMY2020.
In comparison with other countries such as Hong Kong, Bangkok and Australia, Malaysia still has the lowest departure levy for economy class passengers (for both Asean and non-Asean destinations) and premium class passengers (for Asean destinations), it noted.
All in, MIDF Research maintained its ‘positive’ view on Malaysia’s overall aviation sector.
“The downward revision of PSC for international departures beyond Asean to RM50 (previously RM73) for airports excluding KLIA Main Terminal which took effect on Oct 1, 2019 could undermine the efforts of implementing the Regulated Asset Base framework from January 2020.
“Nevertheless, we believe that the Government of Malaysia has been working closely with the Malaysian Aviation Commission to ensure that new PSC rates starting from January 2020 would be reflective of the service levels of respective airports under the Regulated Asset Base framework.
“In the meantime, the lower PSC for beyond Asean destinations in airports ex-KLIA will spur traffic growth especially for LCCs such as AAGB (for routes in China and India) and AAX between now and the of implementation of new aeronautical charges in January 2020.
“Henceforth, the prospect of travel demand remains upbeat coming into seasonally strong 4QCY19 and approaching VMY2020.
“Therefore, we strongly believe that MAHB passenger numbers for Malaysian operations can surpass the 100 million mark in 2019, while maintaining a relatively conservative growth rate of 3.5 per cent at approximately 102.5 million passengers.”
Source: theborneopost.com
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