Passenger traffic stays strong in the first quarter

Recovery reaches 86% of pre-pandemic levels

“The entry of new airlines such as Air Macau Co Ltd, Zhejiang Loong Airlines Co Ltd, Turkmenistan Airlines and Dubai Aviation Corp has also given the industry a boost.”

PETALING JAYA: MIDF Research is maintaining a “neutral” call on the aviation sector as both positives and negatives are to be expected for the rest of the year.

The research house said despite passenger traffic being the lowest so far this year during the Ramadan month, it had also remained above seven million passengers in March 2024 for two months in a row, now.

MIDF Research said for the first quarter of 2024, passenger traffic recovered to 86% of pre-pandemic levels, which was a strong indication of recovery for the sector.

It added that domestic passenger traffic stood at 73%, while international passenger traffic was 86% of pre-pandemic levels.

“Compared with January 2024, there was a 1.5% increase of 3,300 passengers in average daily numbers.

Notably, last month boasted the highest load factors to date, with international flights reaching 81% and domestic flights reaching 79% of pre-pandemic levels,” it said.

The entry of new airlines such as Air Macau Co Ltd, Zhejiang Loong Airlines Co Ltd, Turkmenistan Airlines and Dubai Aviation Corp has also given the industry a boost, amounting to 1,386 more weekly flights in the first quarter of 2023.

On top of that, Iraqi Airways Co had reestablished its presence in the country during the quarter while existing airlines resumed their operations to previously served markets and introduced new services.

“Among the new services from Kuala Lumpur operated by foreign airlines are flights to Kunming, Beijing Daxing and Chengdu, possibly taking advantage of relaxed visa requirements,” it said.

On the other hand, geopolitical tensions in West Asia have resulted in altered flight routes to avoid the affected airspace.

“A notable challenge arising from this conflict is the increase in jet fuel prices. Locally, we find that the impact is partially mitigated by the ongoing implementation of fuel surcharges and the higher average airfares attributed to reduced aircraft availability, compared to pre-covid times,” MIDF Research noted.

Additionally, the impact of the Mount Ruang eruption in Indonesia last week has been relatively contained as flights were reinstated soon after and no loss in traffic had been recorded.

The research house said a fuller picture will take time to emerge after taking into consideration the Aidilfitri holiday and heavier traffic due to passengers returning from pilgrimages to Mecca.

MIDF Research said its outlook for passenger traffic is consistent with projections indicating 2% growth compared with levels in 2019.

It added this also aligned with the Malaysian Aviation Commission’s forecast.

“However, notable downside risks include potential delays in Airasia’s full fleet reactivation and disruptions in Boeing aircraft deliveries to local airlines,” the research house noted.

Last September, Airasia announced its plans to reactivate its 204 aircraft, supported by engine provider CFM International.

Capital A chief executive officer Tony Fernandes said the company had put in much efforts to bring back their planes and restart operations, particularly post-covid.

On another note, the Malaysia Aviation Group had expressed concerns last month over the delays of Boeing aircraft, which will most likely impact its network expansion.

MIDF Researcj said has maintained a “neutral” call on Malaysia Airports Holdings Bhd as waivers and discounts for tenants are expected to end this year, while other aviation charges will be adjusted for inflation.