CAPA: Malaysia’s aviation industry set to fly high

There will be intense competition among airlines in Malaysia, says CAPA

MALAYSIA’S aviation industry is likely to see high single-digit growth this year, based on the demand for inbound and outbound traffic.

There would also be intense competition among airlines in the country, said Australia-based CAPA-Centre for Aviation chief analyst and Southeast Asia chief representative, Brendan Sobie.

“The local aviation industry would see some expansion at AirAsia and Malaysia Airlines. Malindo Air’s expansion is still unknown as its business plan is flexible and difficult to predict.

“In some cases, the expansion includes new routes and existing routes. Airlines will also be taking delivery of new aircraft,” he told NST Business recently.

He said the local aviation sector recorded about 10 per cent growth last year, the fastest since 2013.

Established in 1990, CAPA delivers market intelligence, research and data solutions that support strategic decision-making at organisations in global aviation.

Sobie said there was no competition among aircraft manufacturers and airlines had to decide how best to deploy their assets.

AirAsia has always been an Airbus customer while Malindo Air has a fleet of Boeing and ATR aircraft. Malaysia Airlines will take delivery of Airbus planes this year while the Boeing orders will be fulfilled in the future.

There is a likelihood that these airlines will look for fleet replacement within five to 10 years.

Sobie said airlines needed to be rational and disciplined on capacity.

“Airlines should reduce their capacities in an overly-saturated market and re-look route expansion to gain more passenger traffic. They cannot simply add capacity and expect to be profitable,” he said, adding that too much capacity in certain markets would impact profitability.

Malaysian aviation advisory firm Endau Analytics concurs with CAPA’s findings.

Its founder, Shukor Yusof, said the Malaysian aviation industry would continue to grow in volume and traffic, driven by a firmer economy.

“However, there will be intense competition and airlines that aren’t well managed will suffer.”

Shukor said airlines that were financially strong with a sound strategy would prevail, while others will struggle, especially when oil prices rise.

Meanwhile, Malaysia Airports Holdings Bhd (MAHB) is expecting five new airlines to fly to Malaysia this year. Nine new airlines were registered with the airport operator last year.

MAHB managing director Datuk Badlisham Ghazali said: “Airlines want to fly to Malaysia and they want to know what kind of products that can be offered.

“However, it is not about the number of new airlines. Most importantly, we want existing airlines to increase their frequencies to more destinations in Malaysia.”

Citing an example, he said Qatar Airways would be flying direct to Penang in April. Qatar Airways is already operating the Doha-Kuala Lumpur sector. According to CAPA, Southeast Asia has more aircraft on order at 1,656 units than its existing fleet of 1,449 aircraft. About 76 per cent of the total aircraft order are expected to go to longhaul low-cost carriers.