Malaysian Aviation Sector Predicted to See 4% Growth in 2024, Fueled by Fleet Expansion and Foreign Airlines’ Return

Malaysia’s aviation sector is on track to experience a 4% growth in passenger movements in 2024, buoyed by the expansion of local airline fleets, the return of foreign carriers, and the gradual resurgence of Chinese tourists, says MIDF Research.

In a recent note, MIDF Research projected that passenger traffic in Malaysia’s skies for December 2023 would receive a boost from 30-day visa-free entry agreements with China, India, and the Middle East, coupled with the peak travel season.

“Entering into CY2024 (calendar year 2024), both local carriers and the top five foreign carriers serving Malaysia are expected to increase seat capacity by approximately 24% and 31%, respectively,” MIDF stated.

Notable airlines expected to make their debut in the second half of CY2024 include Air India, British Airways, and Qantas.

“Malaysia Airports Holdings Bhd (MAHB) is actively expanding its broader hub, targeting 83 airlines operating from domestic airports in the next two years, which would exceed the 2019 figure by 20%,” MIDF added.

While the industry gears up for expansion, MIDF has maintained its ‘neutral’ stance on the aviation sector and its ‘neutral’ rating for both MAHB (target price: RM7.80) and Capital A Bhd (target price: 84 sen). This is due to the potential upside from strong international traffic at Istanbul Sabiha Gokcen International Airport and the anticipated finalization of a new operating agreement in the first quarter of 2024.

According to MIDF, Malaysia’s aviation sector exhibited a robust recovery in passenger traffic in November 2023, reaching 77% of pre-pandemic levels.

Malaysia saw a 27.4% year-on-year increase in passenger traffic in November 2023, with 6.6 million passengers. International passenger traffic surged by 51.8%, while domestic passenger traffic grew by 8.8% compared to November 2022.

MIDF attributed the sustained growth in international traffic to the launch of four new services from Kuala Lumpur International Airport to the United Arab Emirates by Batik Air Malaysia, as well as the commencement of flights by Malaysia Airlines to India and Firefly to Thailand.

The domestic sector also maintained an average load factor of above 80% for the second consecutive month, signaling a positive recovery in demand despite airline seat capacity being at 66% of pre-pandemic levels.

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