Kenanga Research's in-house projection showed that tourist arrivals in Malaysia are expected to jump 35% to 27 million in 2024. — Bloomberg
PETALING JAYA: Air travel for business and leisure will continue to recover in 2024, with tourists from China being the key driver, says Kenanga Research.
According to the research firm, its in-house projection showed that tourist arrivals in Malaysia are expected to jump 35% to 27 million in 2024, which is a return to pre-Covid levels.
This is a rise by more than one-third from the estimated 20 million in tourist arrivals in 2023.
“A key driver is Chinese tourists, who have historically contributed to an estimated 12% of total tourist arrivals in Malaysia.
“Furthermore, tourist arrivals are expected to be boosted by the 30-day visa-free regime for Chinese and Indian visitors to Malaysia starting from December 2023, while China is allowing Malaysian inbound visitors 15 visa-free days between Dec 1, 2023 and Nov 30, 2024,” it said in a report.
This should underpin growth in Malaysia Airports Holdings Bhd
’s (MAHB) passenger throughput and Capital A Bhd’s passenger demand in 2024, it added.
Kenanga Research projects MAHB’s system-wide passenger throughput to rise by 7% to 131 million in 2024.
Boosting traffic growth trajectory is aircraft movements that point towards increased medium and long-haul flights to Perth, Sydney and Auckland, South-East Asia and South Asian destinations.
“The Kuala Lumpur International Airport saw the return of Kuwait Airways after a seven-year hiatus, while two other foreign carriers, namely KLM Royal Dutch Airlines and All Nippon Airways, will resume non-stop flight operations to Amsterdam and Tokyo, respectively, after temporarily ceasing operations due to the Covid-19 pandemic,” it added.
It noted that Malaysia Airlines has increased its flight frequency to Tokyo.
AirAsia Group is focusing on its medium-haul operations and has increased its Malaysia AirAsia X flights to 44 weekly across 10 routes from November 2022.
“We see a similar trend for Capital A’s passenger demand in 2024, paving the way for its system-wide revenue seat kilometers to grow 20% to an estimated 70 billion in 2024, after recovering by an estimated 24 billion to 58 billion in financial year 2023 (FY23), based on our forecasts.”
Kenanga Research said Capital A group is targeting to reactivate 187 aircraft by the fourth quarter of its FY23 with 161 aircraft available for operation.
Its operating capacity, meanwhile, is expected to reach 74% of pre-Covid on the back of the peak travel season and the newly established visa-free travel between China and Malaysia.
However, Kenanga Research maintained a “neutral” view on the aviation sector as “the two listed players have their own unique set of issues”.
For MAHB, the proposal to raise airport tariffs based on consumer price index may not be sufficient for the airport operator to generate enough cash flows for capital expenditure purposes, particularly for airport expansion and maintenance.
Although the Malaysian Aviation Commission is proposing a mechanism for MAHB to recoup losses incurred during Regulatory Period 1 (RP1) in RP2, the research firm said it is concerned about the group’s cash flows over RP1.
As for Capital A, it said the clock is ticking on a more viable and holistic regularisation plan to lift the company out of its Practice Note 17 status.
The group plans to divest its aviation group to AirAsia X in exchange for shares, which will subsequently be distributed back to its shareholders.
