KUALA LUMPUR (May 24): The surge in international passenger movements at airports nationwide on the back of higher demand as borders reopen, with airlines actively resuming international flight routes, indicates promising prospects for the aviation industry to recover faster, an economist said.
Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said total passenger traffic in the first two months of this year grew substantially by 390% 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% to 4.74 million passengers, while international passengers rose by 224% to 541,000 passengers during January to 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.
On Monday (May 23), Malaysia Airports Holdings Bhd (MAHB) announced that international traffic at its local network of airports increased by 53% after the border reopened on April 1, compared with a 52% 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%.
MAHB said five airlines — VietJet Air, Scoot, AirAsia, Thai AirAsia and AirAsia X — 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% of the level achieved in the same period in 2019.
It said April 2022 international passenger traffic improved to 14% of April 2019 levels.
“With April 2022 being the fasting month and Malaysia axing pre- and post-flight Covid-19 testing from May 1, 2022, international passenger traffic ought to be even better,” it said.
Nevertheless, Mohd Afzanizam said business and maintenance costs could pose a great challenge to industry players, especially the airlines, in terms of how swift the recovery in profitability is going to be.
He said higher jet fuel prices would mean a need to hedge fuel prices, and hedging requires a cost too.
In addition, rising inflation would mean Malaysian travellers getting calculative with their travelling plans, he noted.
“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.
Source: TheEdge - 25 May 2022
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