PASSENGER GROWTH TO GROW 6-7PC

Improved consumer sentiment and better economic outlook set to fuel demand, say analysts

THE Malaysian aviation sector can expect rising air travel demand this year, fuelled by improved consumer sentiment and better economic outlook, said analysts.

They expect passenger growth of up to seven per cent despite concerns over rising fuel prices.

About 96.54 million passengers used the local airports last year, up from 88.98 million passengers in 2016.

Maybank Kim Eng analyst Mohshin Aziz expects passenger traffic growth of six to seven per cent, based on the expected five to six per cent gross domestic product (GDP) expansion expected this year.

“Based on the expected growth in the GDP, we expect passenger traffic growth at six to seven per cent this year. This will also be fuelled by the fact that most airlines are taking more aircraft this year,” Mohshin told NST Business yesterday.

Malaysia Airlines reportedly said that it was expecting to receive four more Airbus A350 XWBs by March, while Malindo Air announced that it was receiving several additional 737 MAX planes, including larger 737 MAX 9s during the year.

MIDF Amanah Investment Bank Bhd Research expects the traffic growth to remain in positive territory, albeit at a relatively conservative four per cent on higher international passengers.

The subsequent positive effects, i.e net addition of aircraft and higher utilisation rates by airlines will benefit airport operator Malaysia Airports Holdings Bhd (MAHB), said MIDF Research.

Among industry players, the firm expects Malaysia Airlines to see a three per cent year-on-year traffic growth while AirAsia Bhd could have the biggest growth of 12-15 per cent.

Malindo Air could see a growth of 5.0-10.0 per cent, and 8.0-10 per cent for AirAsia X Bhd.

“We expect the additional capacity to be well absorbed by the growth in demand, especially by the locals on improving consumer sentiment and better economic outlook,” said MIDF Research.

Hong Leong Investment Bank Bhd (HLIB) expects continued growth in air travel demand this year, with overall capacity growth in the system to be at six to seven per cent year-on-year.

HLIB also imputed passenger traffic growth of six and 4.8 per cent for MAHB for this year and 2019, respectively.

“The growth will be driven by international traffic from the rebound in tourist arrival growth and continued strong demand from Malaysians, especially for overseas travelling, as consumer sentiment continues to improve,” it said.