KUALA LUMPUR: Malaysia's aviation passenger traffic is expected to reach 94 per cent recovery in the calendar year 2024 (CY24), said MIDF Research.
The firm recently revised down its passenger traffic assumptions for Malaysia due to recent challenges in the industry including delays in aircraft deliveries and shortages of parts and labour.
"We now expect this year's recovery to reach 94 per cent from a growth of 4.0 per cent.
"That said, the recent appreciation of the ringgit against the dollar and easing fuel prices are benefiting airlines, as the majority of their expenses, particularly jet fuel, are US dollar-denominated," it said in a note.
MIDF Research said key international markets that were the main contributors to the increase in passenger traffic were Indonesia, China and India.
The firm expects the trend for China and India to continue, supported by the reciprocal 30-day visa-free travel policy, with China extending this policy for Malaysians until December 25.
"We also anticipate that the high-yield environment will persist, with average fares likely rising as Malaysia Airlines temporarily reduces capacity by 20 per cent for the rest of the year.
MIDF Research kept its "Neutral" call on the sector.
Capital A Bhd (Buy, target price: RM1.06) continues to be the firm's top sectoral pick, as its aviation business has been less severely impacted by recent disruptions in the industry.
"We believe its fleet activation and expansion plans position it well to address capacity gaps," it added.