Newsroom / News Releases / Passenger Traffic Growth in Excess of 5.0 Per Cent Forecasted for Air Travel in Conjunction with Visit Malaysia 2020
Passenger Traffic Growth in Excess of 5.0 Per Cent Forecasted for Air Travel in Conjunction with Visit Malaysia 2020
Passenger Traffic Growth in Excess of 5.0 Per Cent Forecasted for Air Travel in Conjunction with Visit Malaysia 2020
KUALA LUMPUR, 10 DECEMBER 2019 – The Malaysian Aviation Commission (MAVCOM) published today the fifth edition of its bi-annual Industry Report, Waypoint. The Report offers an overview of the performance of the Malaysian aviation sector for the first half of 2019 (1H19) as well as prospects for 2020.
MAVCOM forecasts passenger traffic in 2020 to grow between 5.0 per cent year-on-year (YoY) to 6.0 per cent YoY, which translates to between 114.9 million and 116.0 million passengers. The Commission forecasts the growth to be driven by Visit Malaysia 2020 and a 3.2 per cent YoY increase in domestic seat capacity growth. The forecasted growth in 2020 follows MAVCOM’s revised 2019 passenger traffic forecast to between 109.1 million and 109.7 million, being a growth of between 6.4 per cent and 7.0 per cent YoY, while actual traffic growth for 1H19 was 5.2 per cent YoY.
Other Key Highlights
In 1H19, Malaysia recorded 4.8 million tourist arrivals by air, resulting in an 8.8 per cent growth YoY. This is higher than the growth recorded for total tourist arrivals by all modes of transport of 4.9 per cent YoY, resulting in arrivals of 13.4 million. This increase is mainly as a result of higher tourist arrivals from Indonesia, China, and Thailand, which offset the decline in tourist arrivals from Singapore and Brunei. Collectively, these five countries constituted 78 per cent of the total tourist arrivals in 1H19.
In 1H19, average operating profit margin of Malaysian carriers fell to 0.3 per cent YoY on the back of rising costs. While average cost per available seat kilometre (CASK) saw a 5.9 per cent YoY increase to 17.9 sen, revenue per available seat kilometre (RASK) decreased by 2.2 per cent to 15.9 sen. MAVCOM takes note of the greater RASK-CASK negative spread in 1H19 compared to the corresponding period in 2018, reflecting decreasing profitability of Malaysian carriers and a challenging operating environment in Malaysia. Stronger domestic passenger traffic growth relative to international passenger traffic growth could also influence aerodrome operators’ earnings in 2020 as passengers incur a lower Passenger Service Charge for domestic travel.
Seat capacity by Malaysian carriers is expected to grow by 2.0 per cent YoY in 2020 compared with 4.3 per cent YoY in 2019. Subsequently, average fares by the carriers are forecasted to remain flat or rise slightly due to slower growth in capacity, which may also enable local carriers to improve their load factors.
Dr. Nungsari Ahmad Radhi, Executive Chairman of MAVCOM said, “The Commission notes the growing development of alternative airport hubs such as Johor Bahru, Kuching, and Kota Kinabalu in 2019 as carriers allocate more seats to these airports, which enables a wider choice of domestic destinations. Greater allocation of seats for these airports supported the domestic-led growth in 2019 and is expected to persist in 2020, where routes within Sabah and Sarawak will experience the highest growth.”
A Technical Paper entitled, Managing Airport Demand: The Role of Airport Slots was also released together with the fifth edition of Waypoint. The Paper discusses the role of slots in managing airport demand, where a slot is a permission given to airlines to utilise the full range of airport infrastructure relating to their take-off or landing operations.
An airport is congested when its infrastructure is incapable of coping with the demand at almost all times (Level 3) or during peak periods (Level 2). In Malaysia, only the Kuala Lumpur International Airport is a Level 3 airport, as classified by the International Air Transport Association. However, nine other airports in the country also face congestion, handling more passengers than their terminals’ respective design capacities.
Slot allocation for airports in Malaysia is carried out by the National Slot Coordination Malaysia. Slot-related measures are also considered by MAVCOM when assessing exemption applications or mergers, given its authority over competition matters in aviation services. Due to the growth of the industry and the increasing pressures on airport infrastructure, slot allocation is expected to play a larger role in managing airport demand in Malaysia. Other solutions such as increasing operational efficiency and upgrading air traffic management systems should also be explored before resorting to airport infrastructure expansion.
The Waypoint Report is available as a PDF here.
The accompanying Technical Paper on Managing Airport Demand: The Role of Airport Slots can be downloaded here.