Air travel recovery to be weak on higher fares, costs

Severe skilled staff shortages are likely to risk any meaningful recovery too


THE easing of international travel restrictions from April 1 will help in the pick-up of the battered local aviation industry, but severe skilled staff shortages are likely to risk any meaningful recovery, Pangolin Investment Management analyst and director Mohshin Aziz said.

At the height of the Covid-19 pandemic, local airline operators had retrenched crucial industry labour such as pilots, flight attendants, gate agents, baggage handlers and customer service staff beginning in 2020.

AirAsia Bhd and AirAsia X Bhd, had retrenched 10% of their 24,000 employees in 2020, while Malaysia Airlines Bhd (MAB) offered voluntary unpaid leave to all its 13,000 employees.

The national carrier said such a scheme was also offered to staff of its parent Malaysia Aviation Group and subsidiaries including MAB Kargo, MAB Engineering, Firefly and MASwings in 2020.

Although the government’s border reopening decision is a catalyst for the industry to grow, recovery would remain fragile and could take from six to 18 months to get back to pre-pandemic levels, Mohsin told The Malaysian Reserve (TMR).

“If you have restrictions, even if small, then that will inhibit or slow things down to be back to fully normal. I don’t think we’re fully ready for it and we will face many issues. Many simple things including manhandling at airports and borders could become an issue because we have lost our efficiency skills. I suspect we may have shortages of many critical areas and skills.

“Nonetheless, border reopening is the first step for industry recovery. It will enable a freer mobility of people in and out, and this will greatly spur the tourism industry as well,” he added.

Echoing the same sentiment, aviation consultancy Endau Analytics founder and analyst Shukor Yusof said the growth for the industry won’t make much difference for fliers as the cost of flying is higher now compared to pre-Covid with people needing to pay for pre-departure tests.

“AirAsia has introduced fuel surcharges and these will deter travellers. Overall, Covid-19 has changed the industry forever. The landscape has changed. It will hit all airlines in Malaysia.

“Among the challenges includes — permanent demand destruction in air travel such as fewer passengers due to higher costs, inflation and a likely global recession triggered by the Ukraine war,” he told TMR.

Universiti Kebangsaan Malaysia Institute of Malaysian and International Studies director Prof Dr Sufian Jusoh believed the border reopening will definitely increase the flight frequency to domestic and international destinations.

He said Malaysia Airlines, AirAsia, Malindo and other international carriers will be able to recoup some income from fares as many of these airlines have been operating on limited schedules and capacity.

“April 1 coincides with Ramadhan and Hari Raya seasons, hence, there will be an increase in demand for those who celebrate Hari Raya and holidaymakers. I would say the regional travel within Asean will increase. Some long hauls may also benefit from the open border, but some travellers will remain cautious.

“Business travellers will probably travel less due to availability of digital meeting facilities, hence, reducing the need to travel. I would say it will take another one or two years before things will go back to normal. But the airlines have to make adjustments. Things may never be the same again.” he told TMR.

While we are not sure whether the pandemic may re-escalate, Sufian said some travellers may remain cautious due to the Ukraine conflict and its effect on ticket prices.

The Malaysian Aviation Commission expects the passenger movements to reach 32.6 million to 49 million or about 30%-45% of pre-pandemic level in 2022 predominantly driven by flights to domestic and Asean markets.