Visa-free agreements set to propel air passenger traffic growth

File pic - AZHAR MAHFOF/The Star

PETALING JAYA: Air passenger traffic volumes have been on the rise and the anticipated reciprocal visa-free entry agreement between China and Malaysia from December 1 onwards is expected to give it a further boost.

Malaysia has also decided to unilaterally extend a similar arrangement to India and the Middle East.

According to MIDF Research, the traffic numbers in the fourth quarter of 2023 (4Q23) will receive additional support from the gradual full fleet reactivation of Malaysia AirAsia (MAA), scheduled for completion in December 2023.

The research firm said its passenger traffic projections remain unchanged, aligning well at 75% of its full-year estimate and with an anticipated stronger performance in December 2023.

"Our expectation is an 85% recovery this year (domestic: 90%, international: 80%)," MIDF, which has a “neutral’’ stand on the aviation sector, said.

It notes that for the month of October, Malaysia’s passenger movements steadily recovered as airlines address fleet shortages caused by supply chain and maintenance, repair, and overhaul (MRO) challenges.

"Malaysia Airports Holdings Bhd’s local airports saw 6.8 million passenger movements in October 2023, marking an 80% recovery (domestic: 80%, international: 79%). The equal contribution of 50% from both the international and domestic sectors to total passenger movements indicates a return to the pre-pandemic ratio," it added.

International seat capacity grew by +3.3% year-on-year (y-o-y) in October 2023, with a load factor of 74.9%.

Northeast Asia experienced the highest growth in passenger movements at +12.2% month-on-month.

Despite incomplete recovery, China’s Golden Week (from Oct 1-7, 2023) contributed to a +33.0% increase in passenger movements compared to the same period in September 2023. Notably, Japan, Pakistan, Taiwan, and Turkey recorded the highest passenger movements in October.

Meanwhile, the domestic sector achieved the second-highest average load factor to date at 81.5%, despite airlines offering seat capacity at 69% of pre-pandemic levels. This was partially attributed to the recent suspension of MyAirline, MIIDF said.

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