Aviation industry to grow 6.5-7% in 2018

Malaysia Airports Holdings Bhd (MAHB), which manages a network of 39 airports

KUALA LUMPUR: The Malaysian Aviation Commission (MAVCOM) is optimistic of continued positive industry performance in 2018 and expects a growth of 6.5 to seven per cent, which will see Malaysia surpassing the 100 million passenger mark for the first time.

In its first biannual Industry Report, Waypoint, for 2018, MAVCOM said 2017 was a year of strong industry performance compared with 2016, as Malaysia’s passenger traffic recorded an 8.1 per cent year-on-year growth which translated into 99.1 million international and domestic passengers.

Executive Chairman Gen (R) Tan Sri Abdullah Ahmad said on the whole, the Malaysian aviation industry appeared well-positioned for growth in the face of challenges, given narrowing margins and rising oil prices.

“The last two years have been strong from an industry standpoint, as shown by passenger traffic growth, industry operating profitability and market capitalisation of public-listed aviation companies during this timescale, especially in comparison to previous period.

“Challenges remain, but MAVCOM is optimistic that the positive industry performance of recent years will continue in 2018,” he said.

The Waypoint report said Malaysian carriers had increased their Revenue per Available Seat Kilometre (RASK) at a greater rate than their Cost per Available Seat Kilometre (CASK).

It said between 2014 and 2017, from an operating loss of RM0.5 billion in 2014, the aviation industry marked a significant turnaround when its operating profit increased to RM1.6 billion in 2017.

However, it said crude oil price is expected to increase between 10.7 per cent and 30.5 per cent in 2018 year-on-year, based on forecasts by international agencies, including The International Air Transport Association (IATA) and this may exert downward pressure on airlines’ profitability, rendered already sensitive by a competitive low-fare environment.

The report said Malaysia’s air connectivity in 2017 improved with an addition of eight international destinations and approximately 360,000 seats.

Asia has been and will continue to be the principal region of focus for Malaysia’s connectivity, as 59.8 per cent of air traffic rights awarded by MAVCOM to Malaysian carriers in 2017 are for routes to ASEAN, China and India, it said.

In addition, it said 56.4 per cent of airports that Malaysia was connected to were within the Asia-Pacific region which focused on serving short-to-medium haul regional destinations.

The report also highlighted that the commercial non-scheduled service operators overall reported an improvement in operating profit margins from 10.4 per cent in 2016 to 16.7 per cent in 2017, but the financial performance of individual sub-segments was mixed, with only the aerial work (cloud seeding and mapping), oil and gas, and on-demand chartered flight services sub-segments being profitable.

On connectivity, the Commission said in terms of point-to-point passengers, Malaysia was the fourth most connected country in ASEAN after Thailand, Singapore and Indonesia.

This was because Indonesia, Singapore, and Thailand have higher connections to airports with a higher share of international traffic, both within and beyond Asia Pacific and also, Singapore and Thailand are connected to more destinations and have more seats to those destinations versus Malaysia.

In terms of connecting passengers, MAVCOM said the Kuala Lumpur International Airport (KUL) is the second largest international hub airport in ASEAN after Singapore Changi Airport (SIN).

As at 2017, KUL was an international hub for intra-Asia traffic connecting passengers between China, India, Thailand, and Indonesia, and this was a shift from its position in 2010 that used to handle connecting passengers between Australia, Europe and Southeast Asia, it added. - Bernama
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