With the entry of MYAirline, investors are reasonably optimistic that passenger traffic will surge, after all, that was what occurred in 2013 with the entry of Malindo. That said, Maybank IB expects the capacity growth of MAHB’s partner airlines to be a lot more moderate than that experienced in 2013. While the investment bank narrows its full-year 2022 net loss for MAHB by 40%, the 2023 and 2024 earnings are little changed as its target price.
When Malindo (now Batik Air Malaysia) commenced operations in 2013, MAHB Malaysia passenger traffic surged 18% YoY 2013. However, it cant be said that the entry of MYAirline will cause history to repeat itself. One, the 13th General Election was held in 2013 and it is well documented that GEs have a positive impact on passenger traffic. Two, Malaysian Airlines joined the Oneworld Alliance that year which encouraged member airlines to fly more frequently to Malaysia. Three, the other airlines took delivery of many aircraft that year (AirAsia Malaysia: 8, AirAsia X: 7, Firefly: 2, Malaysia Airlines: 7, MASWings: 3) over and above the 11 aircraft that Malindo took delivery of that year.
Going forward, no Malaysian airline other than Batik Air Malaysia has plans to increase its fleet size. AirAsia Malaysia itself plans to transfer 10-11 aircraft to Indonesia AirAsia to capitalise on high fares there. Thus, MYAirline’s 4 aircraft may not grow industry capacity by much.
Channel checks also reveal that MYAirline will be headquartered at klia2 as opposed to KLIA Main. The benchmark passenger service charges levied on passengers departing from KLIA Main and other Malaysian airports is MYR11 for domestic and MYR80 for international passengers, thus making yields lower.
The benchmark PSC levied on passengers departing from klia2 is lower at MYR8 for domestic and MYR40 for international passengers.
