MAHB’s passenger throughput jumps 42 pct in FY23, air travel to continue to recover this year
KUCHING: Malaysia Airports Holdings Bhd’s (MAHB) financial year 2023 passenger throughput surged 42 per cent year-on-year (y-o-y) driven by a rebound in air travel.
This recovery in air travel is expected to continue in FY24, with tourists arrival expected to jump 35 per cent to 27 million in FY24, analysts observed.
According to a report by the research team at Kenanga Investment Bank Bhd (Kenanga Research), MAHB’s FY23 systemwide passenger throughput (including Istanbul SGIA) came in within expectations.
“Its total passenger traffic continued to gain traction in FY23 at 119 million (up 42 per cent y-o-y). As an indication that traffic recovery has continued to show buoyancy, FY23 passenger movements reached 85 per cent of FY19 level.
“Amplifying the traffic growth was the increase in travellers’ confidence and air travel demand, allocation of more slots at other international airports, reactivation of more aircraft, new aircraft delivery and China’s reopening of borders in January 2023.
“Specifically, international passenger throughput for FY23 grew 80 per cent or 86 per cent of FY19 level. Domestic passenger throughput continued to record a steady growth, reaching 83 per cent of FY19 level with 61 million passengers (19 per cent y-o-y),” the research team pointed out.
Its Malaysia operation’s total passenger movements for FY23 grew by 55 per cent with international and domestic segments recording 39 million (up more than 100 per cent y-o-y) and 43 million (20 per cent y-o-y) passengers, respectively.
It also pointed out that the recommencement of more than 45 airlines in FY23 boosted airlines’ total seat capacity recovery by more than 75 per cent.
Similarly, it said, Türkiye operations, namely Istanbul SGIA’s traffic continued to exhibit positive momentum. Passenger movements for Istanbul’s SGIA exceeded 2019 levels, registering 38 million passengers, an increase of 4.5 per cent over 2019.
Looking ahead, Kenanga Research opined: “We expect business and leisure air travel to continue to recover throughout FY24. According to our in-house projection, tourist arrivals in Malaysia are expected to jump 35 per cent to 27 million (consistent with Tourism Malaysia’s projection to return to prepandemic levels) in FY24 from an estimated 20 million a year ago.
“A key driver is Chinese tourists that had historically contributed to an estimated 12 per cent of total tourist arrivals in Malaysia. Furthermore, tourist arrivals is expected to be boosted by the 30day visa-free regime for Chinese and Indian visitors to Malaysia starting from December 2023 and China, allowing Malaysian inbound visitors 15 visa-free days between December 1, 2023 and November 30, 2024.
“This should underpin growth in MAHB’s passenger throughput demand in 2024.”
It also expected traffic trajectory to grow in subsequent months as airlines continue to reactivate more aircrafts to match increasing demand.
“Amplifying traffic growth trajectory is aircraft movements that are pointing towards increased medium and long-haul flights to Perth, Sydney and Auckland, Southeast Asia and South Asia destinations.
“KL International Airport saw the return of Kuwait Airways after a seven-year hiatus, while two other foreign carriers i.e. 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.
“In addition, Malaysia Airlines has increased its flight frequency to Tokyo from November 2022, meeting the surge in travel demand after Japan reopened its borders to international travellers. AirAsia Group meanwhile is focusing on its medium-haul operations and had increased its Malaysia AirAsia X flights to 44 times weekly across 10 routes from November 2022,” it added.
All in, Kenanga Research maintained its ‘market perform’ rating on the stock.
It explained: “We like MAHB for it being the dominant airport operator in Malaysia and one of the largest in Türkiye, being a good proxy to the recovery of air travel and tourism locally, regionally and globally, and its strong shareholders who have demonstrated unwavering support through thick and thin (including during the pandemic and a massive cash call in 2014).”
However, it cautionef that the recent proposal to peg airport tariffs to the CPI (despite operating cost rising at a much faster pace) could work against MAHB’s ability to generate enough cash flow for capex purposes, particularly for airport expansion and maintenance.
“While MAVCOM also proposes a mechanism for MAHB to recoup losses incurred during RP1 in RP2, we are concerned over MAHB’s cash flow over the RP1 duration.
“While the proposals in the MAVCOM consultation paper are not cast in stone, they do significantly raise MAHB’s earnings risk over the medium term,” it said.