Tourist arrivals to Malaysia poised to rise four-fold

The increase, Kenanga Research says, would be driven by the return of both business and leisure air travel globally.

PETALING JAYA: Tourist arrivals in the country is projected to jump four-fold to 9.6 million in 2023 from an estimated 2.5 million a year ago on the back of the reopening of international borders, according to Kenanga Research.

The increase, according to the research house, would be driven by the return of both business and leisure air travel globally.

Other factors include the revocation of all on-arrival quarantine and testing requirements in Malaysia as well as the gradual reopening of China.

It notes that China has historically accounted for an estimated 12% of the total tourist arrivals in Malaysia.

The factors should underpin growth in Malaysia Airports Holdings Bhd’s (MAHB) passenger throughput and Capital A Bhd’s passenger demand in 2023, it added.

“We project MAHB’s system-wide passenger throughput to rise between 29% and 15% to 101 million and 116 million in 2023 and 2024 respectively, but it’s still a long way from matching the pre-pandemic level of 141 million recorded in 2019.

“Similarly, we project Capital A’s system-wide revenue seat km to grow 52% to 35 billion in 2023, but still falls short of the pre-pandemic level of 63 billion in 2019,” Kenanga Research said in report where it reiterated its “neutral” view on the sector.

It said MAHB’s much-needed tariff hike did not appear to be forthcoming.

According to the research house, the recent consultation paper published by Malaysia Aviation Commission’s (Mavcom) to keep airport tariffs status quo could work against MAHB’s ability to generate enough cash flows for capital expenditure purposes, particularly for airport expansion and maintenance.

“While Mavcom also proposes a mechanism for MAHB to recoup losses incurred during Regulatory Period 1 (RP1) in Regulatory Period 2 (RP2), we are concerned about MAHB’s cash flows over RP1.

“Although the proposals in this consultation paper are not cast in stone, they do significantly raise MAHB’s earnings risk over the medium term,” Kenanga Research said.

Meanwhile a regularisation plan to lift Capital A out of its Practice Note 17 status is ongoing.

But despite the rising demand, the research house expects Capital A to remain in the red over the short term as economies of scale are still lacking in its airline operations.

The company’s digital business, on the other hand, has a long gestation period, according to the research house.

“The group plans to divest its aviation group to AirAsia X in exchange for shares, which will subsequently be distributed back to its shareholders.

“The details of the regularisation plan are expected to be announced by end-January or early February 2023 with completion by July 2023,” it said.

Article type: free
User access status:
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

tourists , China , airtravel , business , leisure , MAHB


Next In Business News

Ringgit opens higher against greenback ahead of US economic data
MyEG shares jump on China Customs deal
MyNews comes under selling pressure as earnings result disappoints
Bursa stays bullish after three straight days of gains
Iverson Associates bags Microsoft award
Trading ideas: MR DIY Group (M) Bhd, Sapura Energy, MyNews, Crescendo, PPT Synergy
FDIC faces US$23bil in costs from bank failures
US money supply falling at fastest rate since 1930s
Air travel recovery reaches full speed
Local banks well grounded

Others Also Read