KUALA LUMPUR: Malaysian airports are poised to handle more inbound tourists as the expected expansion of air traffic rights and relaxation of visa requirements encourage airlines to launch more flights.
Asian transport equity research firm Crucial Perspective chief executive officer Corrine Png said the positive economic growth would also drive passenger volume in the leisure and business segments in Malaysia.
"This will open up new destinations and increases flight frequencies that facilitate international traffic to or from Malaysia,” she told NST Business recently.
Malaysia Airports Holdings Bhd’s (MAHB) local network airports registered a 3.6 per cent growth in the first quarter (Q1), registering 24.4 million passenger traffic.
MAHB’s international traffic increased 10.8 per cent while domestic traffic decline 3.5 per cent.
Aircraft movements grew 1.2 per cent in the first quarter (Q1) this year with international movements registered 12.4 per cent growth while domestic sector declined 5.3 per cent previously.
Corrine said it expected MAHB would be able to sustain a moderate growth between six per cent and seven per cent in reference to MAHB’s network airports growth of 7.6 per cent to 128.61 million passengers in 2017 from 119.56 million passengers in 2016.
MAHB’s network airports in the first two months growth this year was mainly driven by robust travel demand from China, India and Southeast Asia, Corrine said.
“We saw Chinese and Hong Kong airlines increasing flights to Malaysia significantly. Anecdotally, Shanghai Airlines, Cathay Dragon and Xiamen Airlines increased their flights to Malaysia by around 110 per cent, 90 per cent and 50 per cent (YoY) in Q1, respectively,” she added.
The growth was primarily fuelled by origin and destination passengers on international routes rather than transit traffic.
According to CAPA - Centre for Aviation, the overall Malaysian market should grow in the high single digit in 2018, representing a slight slowdown compared to the 10 per cent achieved in 2017.
Maybank Investment Bank aviation analyst Mohshin Aziz said MAHB’s network airports would be sustained by the airlines, local economy and both tourist and travel sentiments.
“Airport operators should make sure its service is good and operation is smooth,” he said.
MIDF Research aviation analyst Danial Razak said MAHB was currently riding on a positive trajectory based on its cumulative passenger traffic data.
“The trend in passenger traffic is expected to be robust due to seasonality factors and expected to continue at a positive momentum at least in the short to medium term period,” he said.
Danial said the trajectory will be driven by capacity expansion of airlines at MAHB airports as well as encouraging expectation of macroeconomic performance throughout the year.
"Given our optimism on MAHB due to exposure from robust travel and tourism demand, we maintained a “Buy” call with a target price of RM9.80.
"MAHB is poised to benefit in the long-run based on the healthy trend of passenger traffic and improving airport operational efficiency in its network airports,” he said.
On a regional perspective, Bloomberg Intelligence infrastructure analyst Denise Wong said major Asia airports should continue to achieve revenue and profit growth even as their capacity comes under increasing pressure.
“Airports in China and Southeast Asia have ample opportunity to increase their non-aeronautical revenue. A shift to higher-yielding international traffic and the proliferation of low-cost carriers could also boost productivity,” she said.
Wong pointed out Asian airports could increase their non-aeronautical revenue on more international traffic and enhanced products and services.
“Airports in Thailand, Sydney, Auckland and Malaysia could also convince passengers to spend more as their upgraded facilities and enhanced efficiency boost customer satisfaction.
“Shorter wait times for procedures such as check-in, customs, security and boarding time will free up travellers to spend more time buying at airport retailers.
According to a study by the Airports Council International, every one per cent increase in passenger satisfaction delivers a 1.5 per cent increase in non-aeronautical revenue.