Malaysia’s aviation sector will charge ahead in 2023 after 2022 has shown turnaround signs, according to analysts.
They, however, are mixed on whether the sector would see a full recovery or still be a long way from matching the pre-pandemic level.
The sector will benefit from the increasing air travel demand and higher availability of operating aircraft to cater for the higher demand, they added.
Hong Leong Investment Bank Bhd (HLIB) outlined four main drivers of the sector’s growth – strong recovery for international travel, higher availability of aircraft and workforce, easing of jet fuel prices to US$100 a barrel and strengthening of the ringgit against the US dollar.
“Judging from the current developments, we expect Malaysia’s 2023 air travel demand to charge upwards near pre-pandemic 2019 levels,” HLIB analyst Daniel Wong said.
The reopening of Malaysia’s borders on April 1 this year as well as its neighbouring countries in Asean and South Korea, Taiwan, Japan and Hong Kong had fuelled the demand for travel, he added.
China’s possible reopening of its borders in 2023 would ensure strong recovery for the aviation industry, Wong said.
HLIB has kept an “Overweight” rating on the aviation sector and recommends “Buy” for Malaysia Airports Holdings Bhd (MAHB) and AirAsia parent Capital A Bhd with target prices of RM7.75 and RM0.88 respectively.
Kenanga Research, meanwhile said, it would take time for local airlines and airport operators to “reclaim pasty glory”.
The firm expects MAHB’s system-wide passenger throughput to rise 29 per cent and 15 per cent to 101 million and 116 million in 2023 and 2024 respectively.
This would still be a long way from matching the pre-pandemic level of 141 million recorded in 2019.
Similarly, Kenanga Reseach expects Capital A’s system-wide revenue seat kilometre to grow 52 per cent to 35 billion in 2023, but still falls short of the pre-pandemic level of 63 billion in 2019.
Meanwhile, the Malaysian Aviation Commission (Mavcom) expects Malaysia to post between 74.6 million and 80.8 million passengers, or growth between 40 per cent and 50 per cent year-on-year in 2023.
The aviation industry regulator also said that based on its current data, Malaysia’s air passenger traffic for the first 10 months in 2022 is 42.2 million, reaching a monthly high of 5.6 million passengers in October and an average of five million passengers per month since May.
“With more seats scheduled in 4Q22 than any other previous quarters, the total air passenger traffic for Malaysia in 2022 is now estimated to outperform Mavcom’s best-case scenario forecast and reach between 53 million and 55 million passengers, growing by between 380 per cent and 400 per cent year-on-year,” Mavcom said in a report.
Mavcom said international tourism was set to rebound next year for Malaysia with the easing of the remaining travel restrictions worldwide.
Local airlines including Malaysia Airlines, AirAsia, AirAsia X and Batik Air have made plans to restore their capacity and increase frequencies on popular destinations such as Hong Kong, Japan, Taiwan, Australia and the Middle East.
“Additionally, the reinstatement of Malaysia’s US FAA Category 1 rating will enable the expansion of codeshare agreements and services to the US market, providing opportunities for carriers to expand their services into North America,” Mavcom said.
It added that the domestic and Asean travel segments would remain resilient and were expected to increase gradually next year.
The launch of a new low-cost carrier, MYAirline Sdn Bhd, is expected to push the domestic traffic close to four million passengers per month.
Source: Civil Aviation Authority-Qatar