MIDF Investment Bank (MIDF) maintains a NEUTRAL rating as Malaysia’s aviation sector showed robust signs of recovery on May 24, with passenger traffic reaching 97% of pre-pandemic levels, driven by strong holiday travel.
The month recorded 7.7 million passengers, the second-highest figure this year after February, highlighting a significant rebound bolstered by public and school holidays. Both domestic (95%) and international (99%) travel contributed to this near-full recovery, supported by expanded seat capacities by local and foreign airlines.
Continuing a trend seen over seven months, international travel outpaced domestic routes in recovery rates. Key drivers included AirAsia’s resumption of flights from Kuala Lumpur International Airport (KUL) to Bhubaneswar, India, and China Eastern Airlines’ services to Wuhan, China. Additionally, new routes, such as AirAsia’s KUL to Ahmedabad, India, and Juneyao Air’s Penang International Airport (PEN) to Pudong, China, further stimulated international traffic.
Malaysia Airports Holdings Berhad (MAHB), accepting an offer with a price target of RM11.00, is actively pursuing partnerships with 15 additional foreign carriers over the next two years. KUL, now serving 70 airlines, has surpassed its pre-pandemic level of 69 airlines, with seven new foreign carriers having commenced operations year-to-date. Anticipated launches by British Airways, Thai VietJet, and 9 Air by year-end are set to further bolster connectivity.
MAHB’s initiatives, including the Airline X-celeration Programme offering incentives like landing fee waivers and marketing support, aim to enhance air travel recovery. Notably, RM3.0 million has been allocated for marketing efforts on Malaysia-China routes alone, underscoring efforts to stimulate travel demand. Despite a 78% recovery rate for the sector in 1QCY24, uncertainties persist, including potential delays in AirAsia’s fleet reactivation and disruptions in Boeing aircraft deliveries to local airlines.
MIDF maintains a neutral outlook on Malaysia’s aviation sector, forecasting modest +2.0% growth compared to 2019 levels by the end of CY24, aligning with MAVCOM’s optimistic projections.
