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MAVCOM optimistic on growth for Malaysian aviation sector

The Malaysian Aviation Commission (MAVCOM) forecasts that passenger traffic will surpass the 100 million mark for the first time in 2018, growing by up to 7% from the year before.

Should the forecasted number be realised, it will represent three consecutive years where year-on-year growth surpassed 5%, says the commission in an industry report. Last year, Malaysia's passenger traffic grew 8.1% to 99.1 million.

Malaysian carriers are expected to add 2.2% of seats this year, with MAVCOM predicting better load factors as traffic growth is expected to exceed that of capacity.

"Malaysian carriers will be deploying their capacities on routes to and from North Asia, India, and the ASEAN member states. These regions are expected to report strong economic growth in 2018, which will in turn, boost demand for air travel."

In 2014, the Malaysian aviation industry had reported an operating loss of MYR500 million ($126 million). It however saw a "significant turnaround" in 2017, with an operating profit of MYR1.6 billion.

"This solid growth has been supported by strong demand, improved seat inventory control and a low fuel price environment."

MAVCOM notes that the country's air connectivity improved in 2017 with a net increase of eight international destinations, which led to a net increase of around 360,000 seats.

It expects Asia "to continue to be the principal region of focus" for Malaysia's connectivity. This is since 59.8% of air traffic rights awarded to Malaysian carriers in 2017 were for routes to ASEAN member countries, China and India. Moreover, 56.4% of airports that Malaysia is connected to are within Asia-Pacific.

The commission's chairman Abdullah Ahmad says that the Malaysian aviation industry "appears well-positioned for growth, despite... narrowing margins and rising oil prices".

"The last two years have been strong from an industry standpoint, as shown by passenger traffic growth, industry operating profitability and the market capitalisation of public-listed aviation companies during this timescale, especially in comparison to the immediate period before. Challenges remain, but MAVCOM is optimistic that the positive industry performance of recent years will continue in 2018.”

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