KUALA LUMPUR: Malaysia is expected to be the first country in Southeast Asia to see its air travel industry recovering and experiencing overcapacity as local airlines intensify competition between them.
Sobie Aviation Pte Ltd independent analyst and consultant Brendan Sobie said the stiff competition would lead to lower airfares as early as by 2024, although it would not be at the same price level as before the Covid-19 pandemic.
"At some point, at least in Malaysia, there will no longer be a gap between supply and demand. Generally, we'll see fares decline as the supply-demand imbalance narrows. Looking at the capacity and fleet plans of all the (local) airlines, you could see overcapacity in Malaysia by early next year," he told the New Straits Times recently.
Airfares have skyrocketed globally since the pandemic as airlines had to ground all of their aircraft due to the worldwide lockdown.
The reopening of borders has seen air travel demand increasing aggressively but currently most of the airlines could not meet the demand due to aircraft shortage and seat limitation.
However, Brendan said while supply was returning, there were some hiccups due to the supply chain, maintenance, repair and overhaul of the fleet as well as manpower issues.
A total of 6.7 million passengers passed through Malaysia Airports Holdings Bhd's airports in the country in March this year, according to MIDF Research.
This translates into a recovery of 75 per cent (domestic: 84 per cent, international: 66 per cent).
The firm said domestic segment's recovery continued to be above the 80 per cent mark as local airlines restored and introduced new routes.
The international segment recorded the highest number of passengers (3.0 million) since the onset of the pandemic with movements mainly coming from Singapore, Indonesia, Thailand, India, China, and Japan.
Traffic recovery from the China market continued to gain traction on the back of 42 additional flight frequencies in March as compared to the previous month, MIDF Research said.
Overall, the total passenger movements in the first quarter of 2023 stood at 18.7 million, translating into a recovery of 74 per cent (domestic: 84 per cent, international: 64 per cent).
Compared to the fourth quarter of 2022, the passenger movements grew 7.4 per cent with growth mainly coming from the non-Asean sector.
Commenting on the possibility of lower airfares due to the competition between Malaysia's low-cost carriers - Capital A Bhd's AirAsia and MYAirline Sdn Bhd - Brendan said the competition would continue as the latter expands.
"This will be good for consumers on the routes that these two (airlines) compete. Of course, not all fares are low and while consumers can grab a bargain during the initial promo periods, not all fares are low even on the routes they compete on," he added.
Earlier this month, AirAsia and MYAirline were aggressively promoting their Kuala Lumpur-Bangkok routes on social media after latter announced that it was flying to the capital city of Thailand starting June this year.