Kenanga Research has maintained a “NEUTRAL” stance on the aviation sector.
The research house expects the demand for both business and leisure air travel to continue recovering throughout 2023, in line with Tourism Malaysia’s projection of 16.1 million tourist arrivals, marking a 60% increase from 2022.
Air travel is anticipated to return to pre-pandemic levels by 2024, it said in a report today (Oct 5).
Passenger throughput at airports and passengers carried by airlines are expected to show sustained recovery, with specific mentions of airport targets and Capital A Bhd.
However, the research house highlights that each player in the sector faces unique challenges.
For AIRPORT, the proposed tariff hike linked to the Consumer Price Index (CPI) by Malaysia Aviation Commission (Mavcom) may not generate sufficient cash flows for capital expenditure, especially for airport expansion and maintenance.
Additionally, Capital A Bhd is still under the Practice Note 17 (PN17) status, and a viable regularisation plan is awaited.
Despite the positive outlook for air travel, the research firm does not have a specific pick for the aviation sector.
The text underscores the expected recovery in air travel, driven by tourist arrivals and additional flights to various destinations. However, it also highlights concerns about airport tariffs and the PN17 status of Capital A.
