Selangor Journal
AirAsia planes are seen parked at the Kuala Lumpur International Airport 2 (KLIA2) in Sepang, on October 6, 2020. — Picture by REUTERS

Promising recovery outlook for aviation industry

KUALA LUMPUR, May 24 — The surge in international passenger movement at airports nationwide on the back of higher demand as borders reopen, with airlines actively resuming international flight routes, indicates a promising prospect for the aviation industry to recover faster, an economist said.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the total passenger traffic in the first two months of this year grew substantially by 390 per cent from the same period last year to 5.29 million passengers.

This was mainly underpinned by domestic passenger traffic, which recorded a big jump of 420 per cent to 4.74 million passengers, while international passengers rose by 224 per cent to 541,000 passengers during January-February this year.

“In that sense, we can safely say that the industry is on track to record further improvement as restrictions on international borders had been lifted in April… the outlook for the aviation industry looks encouraging,” he told Bernama.

Yesterday Malaysia Airports Holdings Bhd announced that the international traffic at its local network of airports increased by 53 per cent after the border reopened on April 1, compared with 52 per cent month-on-month growth in March.

A total of 2.78 million passengers were recorded in Malaysia for April, with domestic passenger movements totalling 2.13 million or 77 per cent.

The airport operator said five airlines — Vietjet Air, Scoot, AirAsia, Thai AirAsia and AirAsia X — had resumed 17 international routes last month involving destinations such as Ho Chi Minh City, Hanoi, Singapore, Incheon, New Delhi, Bengaluru, Kolkata and Chennai.

Meanwhile, Maybank Investment Bank Bhd said in a note that the country’s international passenger traffic is starting to recover, with total traffic in the first four months of 2022 hitting 32 per cent of the level achieved in the same period in 2019.

It said April 2022 international passenger traffic had improved to 14 per cent of April 2019 levels.

“With April 2022 being the fasting month and Malaysia axing pre- and post-flight Covid-19 testing on May 1, 2022, international passenger traffic ought to be even better,” it said.

Nevertheless, Mohd Afzanizam said the business and maintenance costs could pose a great challenge to industry players, especially the airlines, in terms of how swift the profitability recovery is going to be like.

He said higher jet fuel prices would mean there is a need to hedge fuel prices and hedging requires a cost too.

In addition, rising inflation would mean Malaysian travellers would be more calculative with their travelling plans, he said

“Supply chain disruptions are real and this can affect various industries. Airlines are obviously not immune to this. Therefore, demand is key to the success of airlines but there are other enabling factors that can affect their overall performance,” the economist added.

— Bernama

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