The worst should be over for the aviation sector, with signs of a promising recovery in passenger traffic ahead. Considering Malaysia has one of the lowest passenger service charges (PSCs) within ASEAN, RHB look forward to a few key events around mid-quarter two 2023 for a clearer resolution on the finalised gazetted PSC and loss capitalisation mechanism in the Third Consultation Paper, as well as Malaysia Airport’s new operating agreement with the government.
“We continue to see encouraging growth and recovery rates in international and domestic passenger traffic in Malaysia and Turkey,” said RHB Research (RHB) in the recent Malaysia Company Update Report.
March international passenger movements registered a new high of 4.46 million passengers since Feb 2020, bringing quarter one 2023 international passenger movements to 12.6 million, trailing closer to 78% of quarter one 2019 levels. In Malaysia, quarter one 2023 international and domestic passenger traffic numbers grew quarter-on-quarter by 15.5% and 1.4% to 8.4 million and 10.3 million.
The international growth was likely contributed by various airlines’ operations resumptions. There were an additional 978 weekly frequencies in total versus the preceding quarter. Despite the earthquake in Turkey’s south-east in February, quarter one 2023 international passenger numbers for Istanbul’s Sabiha Gokcen International Airport continued to show a strong recovery momentum, exceeding quarter one 2019 by 42%.
“Overall, the quarter one 2023 total passenger traffic in Turkey has returned to pre-COVID-19 levels and is set to surpass in the coming months, in our view. Meanwhile, we still anticipate a gradual recovery for Malaysia’s traffic numbers, which is currently at 74% of 2019’s levels,” said RHB.
The return of Chinese travellers was gradual, as expected, though RHB is seeing various promising initiatives ahead. RHB thinks the market has yet to reflect the full potential and upside from this tourist giant, which should be an essential catalyst for the tourism industry.
Note that China had the second-highest number of inbound tourists into Malaysia in 2019. The recovery in quarter one 2023 international passenger movements here were within the Asia-Pacific, attributable to China’s border reopenings.
“We are upbeat on government initiatives in securing deals with two Chinese tour agencies for 450k visitors from China to meet the target of 5 million tourist arrivals from there in 2023,” said RHB.
MAHB is also looking to deploy a digital superhighway My-Compass app to increase Malaysia’s visibility. It is set to kick-off in quarter two 2023.
