Mavcom sees passenger growth of up to 7%

  • Business
  • Tuesday, 29 May 2018

Deal said areas of interest for acquisitions included aircraft interiors and data analytics.

PETALING JAYA: The Malaysian Aviation Commission (Mavcom) forecasts year-on-year passenger growth of between 6.5% and 7% this year, which is equivalent to between 105.6 million and 106.1 million passengers for 2018.

The growth, if realised, would mark three consecutive years of growth exceeding 5%.

In terms of seats, Mavcom said in a statement yesterday that Malaysian carriers are expected to add 2.2% year-on-year additional seats into the market.

“Save for the 1.3% year-on-year contraction in seats capacity in 2016, the expected growth in 2018 will be the lowest since 2012, when seats capacity grew by 2.7% year-on-year.

“In 2018, the overall low growth in seats capacity for Malaysian carriers is expected to further improve load factors as traffic growth is expected to exceed the capacity expansion,” said the commission.

Mavcom said Malaysian carriers will be deploying their capacities on routes to and from North Asia, India, and the Asean member States.

“These regions are expected to report strong economic growth in 2018, which will in turn, boost demand for air travel.”

Mavcom said Malaysia’s air connectivity in 2017 improved with more destinations and seats, in line with other countries in the South-East Asia region.

“Malaysia enjoyed a net increase of eight international destinations which it is connected to and a net increase of approximately 360,000 seats, thereby strengthening the country’s degree of international air connectivity.

“Asia has been and will continue to be the principal region of focus for Malaysia’s connectivity, as 59.8% of air traffic rights awarded by Mavcom to Malaysian carriers in 2017 were for routes to the Association of South-East Asian Nations Member States, China, and India.”

In addition, Mavcom said 56.4% of airports that Malaysia is connected to are airports within the Asia-Pacific region, which focus on serving short-to-medium haul regional destinations.

“Other Asean member states such as Thailand, Indonesia, Vietnam, and Cambodia have also taken significant strides in increasing the number of destinations and seats to boost their respective air connectivity.”

Separately, Mavcom said year-on-year passenger traffic grew 8.1% in 2017.

“Operating profitability at industry level in 2017 was RM1.6bil – lower in comparison to 2016 – but a significant turnaround from a cumulative operating loss of RM500,000mil in 2014; while the negative spread between cost per available seat kilometre and revenue per available seat kilometre was reduced by 42.5% in 2017 from the prior year.”

Mavcom also said market capitalisation of the listed aviation companies also increased by 38.4% to RM25.6bil at end-2017 from RM18.5bil at the beginning of 2014.

“Such growth has been supported by strong demand, improved seat inventory control and a low fuel price environment between 2015 and 2016.”

Mavcom expects the increase in oil prices to exert pressure on airlines’ profitability for 2018.

“For the first four months of 2018, the average crude oil and jet fuel prices increased by 18.4% year-on-year and 25.3% year-on-year, respectively, while the International Air Transport Association and the United States Energy Information Administration are forecasting oil prices to increase between 10.7% year-on-year and 30.5% year-on-year in 2018.

“This may exert downward pressure on the airlines’ profitability when fares are currently low.”

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