Malaysia Airline System let go of 4,682 staff under its revamp
KUALA LUMPUR: Malaysian commercial aviation industry sales are forecast to grow at 10.3% per year over the five years, boosted by growing middle class, scrapping of the visa for China citizens and open skies policy.
IHS Global Insight Asia Pacific chief economist Rajiv Biswas forecast on Monday the Malaysian commercial aviation industry sales should grow at 10.3% per year in nominal US$ terms over 2016-2020.
“This rapid pace of growth will be boosted by rapidly growing middle class incomes in Malaysia as well as in neighbouring economies in East Asia, which will help to boost air passenger traffic flows in Malaysia,” he said.
Rajiv said the Malaysian government’s decision to scrap the visa requirement for Chinese tourists can substantially boost long-term air passenger traffic and tourism flows to Malaysia if the policy remains in place in future.
Another main factor is the Asean Open Skies policy for liberalisation of air transport, which he said would help support the growth rate in the aviation industry, he said in his commentary on “Malaysia’s aviation industry outlook and Asia’s aviation industry outlook for 2016-2020”.
Rajiv said gross profits in the Malaysian commercial aviation industry were forecast by IHS World Industry Service to grow at 10.9% per year over 2016-2020.
Underpinning the growth would be the impact of the sharp decline in world oil prices since mid-2014, with only a gradual recovery expected in oil prices over the medium term outlook.
“Capital expenditure growth for the Malaysian commercial aviation industry is forecast to grow at 10.9% per year over 2016-2020, due to the rapid expansion in air passenger traffic in Malaysia.
“The Maintenance, Repair and Overhaul (MRO) industry in Malaysia is forecast to grow rapidly in order to support the strong growth in airline fleets, and will be an important source of new high value-added jobs as well as building Malaysia’s aerospace industry cluster,” he added.
The IHS World Industry Service forecast the Asia Pacific aviation industry was set for buoyant growth with the region’s commercial air transport sales forecast to grow at 9.2% per year in nominal US$ terms over 2016-2020, according to IHS World Industry Service forecasts. This is significantly faster than the 7.5% growth rate forecast for world commercial air transport sales over the same period.
Strong growth in passenger numbers, together with the significant fall in Asia Pacific’s air transport operating costs due to the sharp decline in oil prices, are also boosting aviation industry profits, which are forecast by the IHS World Industry Service to grow at around 9% per year over 2016-2020.
The forecasts said the rapid growth in Asia Pacific’s passenger numbers over the medium term would also underpin strong growth in capital expenditure by the region’s airlines in fleet modernisation and expansion.
IHS World Industry Service forecast capex to grow at an average annual rate of 8.1% per year over 2016-2020.
Commenting on the Asean region, it said Malaysia and Indonesia would be the two fastest growing commercial aviation markets in Southeast Asia, helped by rapidly growing Asia Pacific tourism flows and the strong growth of regional low cost carriers such as AirAsia.
High growth rates in air transport industry sales are also forecast for Philippines and Vietnam, as the rapidly growing size of the middle class population helps to boost air passenger traffic.
Due to rapid growth in air passenger traffic forecast for Asean over the next two decades, a key bottleneck for the Southeast Asian air transport industry will be airport infrastructure, particularly for Manila, Jakarta and Bangkok which need substantial additional investment in expanding airport capacity to cope with rapid growth in passenger numbers.
Singapore is forecast to continue to strengthen its role as a leading commercial aviation and MRO hub for the Asia Pacific region.
Singapore’s commercial aviation industry sales are forecast to grow at 6.2% per year over 2016-2020 in nominal US$ terms. Singapore’s MRO hub already has over 100 aerospace companies, creating an international cluster of excellence to service the rapidly growing jet aircraft fleets of Asian airlines.
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