PETALING JAYA: The expected increase in tourist arrivals to Malaysia will be a shot in the arm for the local aviation sector as passenger throughput is expected to continue improving this year.
Analysts said the numbers would only match pre-Covid-19 pandemic levels by next year while passenger demand is expected to rise.
Kenanga Research said tourist arrivals in the country would jump four-fold to 9.6 million this year from an estimated 2.5 million a year ago.
It attributed this to the return of both business and leisure air travel globally, including Chinese tourists who historically contributed to about 12% of total tourist arrivals in Malaysia.
This should underpin the growth in Malaysia Airports Holdings Bhd
’s passenger throughput and Capital A Bhd’s passenger demand in 2023, the research house added. The latter is the parent company of budget carrier AirAsia.
Kenanga Research, which is maintaining its “neutral” call on the sector, anticipates volume improvement for Malaysia Airports and Capital A.
It is forecasting Malaysia Airport’s system-wide passenger throughput to rise by 38% to 116 million in 2023 compared with the pre-pandemic level of 141 million in 2019.
“We expect traffic trajectory to grow in subsequent months as airlines continue to reactivate more aircraft to match increasing demand.
“Aircraft movements are pointing towards increased medium and long-haul flights to Perth, Sydney and Auckland, South-East Asia and South Asia destinations,” it said.
It expects Capital A’s system-wide revenue seat km to grow 52% to 35 billion in financial year 2023 (FY23), after recovering by 19 billion to 24 billion in FY22.
Capital A expects its passenger demand to continue to rise.
Last November, the group operated 125 aircraft and is targeting to get 140 operational aircraft to reach full fleet utilisation by the second quarter of this year.
Its digital segment is expected to remain loss-making. The airasia Super App is expected to grow, underpinned by the continued resurgence of travel demand from borders reopening and tactical campaigns, along with the expected growth from airasia Food, Ride and Xpress.
However, there are some concerns about Malaysia Airports and Capital A.
“A recent consultation paper published by the Malaysian Aviation Commission (Mavcom) to keep airport tariffs status quo could work against Malaysia Airport’s ability to generate enough cash flow for capital expenditure purposes, particularly for airport expansion and maintenance.“While Mavcom also proposes a mechanism for the airport manager to recoup losses incurred during Regulatory Period 1 (RP1) in Regulatory Period 2, we are concerned over its cash flow over RP1.
“While the proposals in this consultation paper are not cast in stone, they do significantly raise Malaysia Airport’s earnings risk over the medium-term,” it said.
