Higher passenger traffic to buffer MAHB 
from departure levy impact


The negative impact from the implementation of departure levy next month is expected to be mitigated by an inbound passenger growth for Malaysia Airports Holdings Bhd (MAHB).

MIDF Research stated that the extension of the visa relaxation for Chinese passengers until year-end, and continuous efforts from MAHB to attract new airlines, will sustain passenger growth this year.

The research house estimates MAHB passenger numbers to surpass the 100 million mark in 2019, while maintaining a relatively conservative growth rate of 3.5% at approximately 102.5 million passengers.

“Moreover, we expect MAHB’s efforts to not only attract new airlines, but also offer increased connectivity to moderate the effects of the departure levy set to be imposed in June 2019 for outgoing international passengers,” the research firm said in a company coverage yesterday.

MIDF also noted that low-cost carriers  — namely AirAsia Group Bhd and AirAsia X Bhd — are strengthening their presence in core markets, while establishing new hubs in destinations such as Lombok.

“This will continue to attract higher passenger (traffic) in 2019 and will benefit MAHB.”

Passenger traffic in MAHB airports (excluding Istanbul Sabiha Gocken International Airport) rose to a 10-month high in April 2019, increasing 6.6% year-on-year (YoY) to 8.8 million passengers.

The passenger traffic grew 4.7% YoY to 34.2 million in the first four months, making up 33.7% of MIDF’s FY19 passenger growth estimates of 102.5 million.

MIDF Research added that domestic traffic continues on an upward trend with a 13.8% jump in airports (excluding Kuala Lumpur International Airport), as airlines have shifted capacity from the international to the domestic sector.

Meanwhile, international passenger traffic for April 2019 rose 2.5% YoY to 4.4 million passengers — a five-month high due to the Easter holiday in the Western countries.

MIDF noted that the ratio of international to domestic travellers for Malaysian operations stood at 51:49, which is favourable for MAHB as the passenger service charge (PSC) for international passengers is more comparable to that of domestic passengers.

“MAHB targets to bring in 10 new airlines to Malaysia, especially to its five main airports.

“This will maintain a stronger mix of international passengers which bodes well for MAHB in terms of the higher PSC collected,” the research firm added.

The PSC is currently at RM35 for non-Asean destinations and RM73 for beyond the region.

MIDF has placed a ‘Buy’ call on MAHB with a target price of RM8.90 per share.