Airline passenger traffic to rise on domestic demand


THE Malaysian Aviation Commission (Mavcom) expects passenger traffic to rise between 2.9% and 4.1% year-on-year (YoY) to 105.5 million to 106.7 million passengers in 2019 driven by domestic demand.

In its biannual industry report named “Waypoint”, Mavcom noted despite the risks to global economic growth, Malaysia’s economy is expected to stay strong supported by sustained strength in domestic consumption.

The expansion of domestic routes will be the focus of Malaysian carriers as the companies seek to take advantage of the strong domestic consumption, Mavcom noted.

Hence. 93.8% of additional seats deployed in 2019 are for domestic destinations especially by local carriers AirAsia Bhd and Malaysia Airlines Bhd (MAB).

“For 2019, Malaysian carriers are expected to increase capacity by 2% YoY — in terms of available seat kilometres (ASK) — and 5.7% YoY in terms of number of seats.

The divergence between the growth rates of capacity in terms of ASK and number of seats indicates that local carriers are adding capacity by operating higher frequencies to domestic and short-haul international destinations,” MAVCOM stated in the report.

Seats for domestic routes are expected to increase by 7.3% YoY in 2019.

The International Air Transport Association (IATA) forecast flight frequencies and number of destinations of airlines in 2019 will rise, thus supporting the growth of global passenger traffic in terms of revenue passenger kilometre.

“Underlying global economic growth, as well as expectation of lower average fares will also provide support to the growth assumption for 2019. The IATA highlighted that average fares in 2019 are forecast to be 61% lower than the average fares reported in 1998,” the aviation industry regulator noted in its report.

Executive chairman of MAVCOM Dr Nungsari Ahmad Radhi said jet fuel prices could decrease this year and ease some of the financial pressure on carriers.

“For 2019, we expect to see downward pressure on yields and therefore, similar downward pressure on revenues for Malaysian carriers as seat capacity growth is expected to surpass passenger traffic growth,” he said in a statement yesterday.

Average revenue per available seat kilometre for 2018 was 16.3 sen as average international fares fell 2.4% YoY to RM486, while average domestic fares remain unchanged at RM221, Mavcom revealed.

Average cost per available seat kilometre inched upwards by 5.1% YoY to 17.8 sen as jet fuel prices rose 28.8%.

Average load factor in 2018 dropped slightly to 81.8% as capacity expansion eased to 3.2% Mavcom said.