Malaysia's air passenger traffic recovery to continue in 2H 2023 - analysts

04 Jul 2023 02:40pm
Picture for illustrative purposes - FILE PIX
Picture for illustrative purposes - FILE PIX
KUALA LUMPUR - Malaysia’s air passenger traffic recovery is expected to gather pace in the second half (2H) of 2023 to reach 85 per cent of the pre-pandemic levels for the full year, according to MIDF Research.

The non-Asean sector holds considerable growth prospects as more routes are reinstated and flight frequencies increase, it said in a note today following Malaysia Airports Holdings Bhd’s (MAHB) announcement that airports in the country recorded 6.8 million total passenger movements in May 2023, thus surpassing 80 per cent of pre-pandemic levels for the first time.

MIDF Research described the traffic recovery, at 86.2 per cent against May 2019 passenger movements (domestic: 99 per cent, international: 74 per cent), as "impressive”.

However, it remained "neutral” on the aviation sector, saying it made no revisions to its passenger traffic assumptions.

Its overall traffic recovery figure of 85 per cent for 2023 comprises 90 per cent for domestic and 80 per cent for international.

"Potential upsides to our numbers are local airlines rebuilding their fleet and faster-than-expected return of Chinese tourists,” the research house said.

MIDF Research maintained a "buy” on Capital A Bhd (target price: RM1.00) and "neutral” on MAHB (target price: RM7.45)

Meanwhile, Hong Leong Investment Bank (HLIB) Research said air travel is expected to continue to recover as airlines reinstate capacity back to pre-pandemic levels.

"Since the reopening of Malaysia's borders in April 2022, as well as in other regional Asia-Pacific countries, we have seen a strong recovery for air traffic.
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"International traffic recovery (including Asean) continued to gain traction as domestic airlines -- Malaysia Airlines and Capital A -- are restoring international capacity back to 100 per cent by year-end, similarly for foreign airlines,” it said in a separate note.

HLIB Research also said that MAHB guided the recovery rate of planned airline seat capacity to remain above 90 per cent for the domestic segment (currently 94.3 per cent) and breach 80 per cent for the international segment (currently 76.4 per cent) by year-end.

The research house kept its "overweight” rating on the aviation sector with "buy” recommendations on Capital A (target price: RM1.15) and MAHB (target price: RM8.50) - BERNAMA