Local traffic could rise potentially up to 75% and 80% of 2019 levels, but without the international connecting passengers which were part of the traffic in the past

by RAHIMI YUNUS/ pic by RAZAK GHAZALI

DOMESTIC air passenger traffic is expected to slowly recover, reaching between 75% and 80% of 2019 levels at the end of the year, while a full revival could be anticipated in 2021.

The same, however, could not be said about the international market as the trajectory is forecast to be slower throughout the next two years and beyond.

PricewaterhouseCoopers’ Strategy& partner Edward Clayton said local traffic is the silver lining for the aviation sector, which is looking for a reboot in the next few months, but the international market would still be very limited.

“The hope on the horizon is, assuming the majority of Malaysians move to green zones (of Covid-19) and the government shifts the movement controls away from the whole state being declared as an infected area to specific areas within the state, then we will be able to see local traffic going back up potentially up to 75% and 80% of 2019 levels, but without the international connecting passengers which were part of the traffic in the past,” Clayton said in a webinar hosted by European Union-Malaysia Chamber of Commerce and Industry (EUMCCI) last Thursday.

In December 2019, Kuala Lumpur International Airport handled 1.6 million domestic traffic, while other airports in the country recorded 3.2 million, for a total of 4.8 million passengers. An 80% recovery would translate to 3.8 million passengers by end-December 2020.

For international travel, Clayton said the mandatory 14-day quarantine imposed by governments worldwide, including Malaysia, will impede the market.

“As long as the 14-day quarantine period continues, the only people who will be travelling are those repatriating to their home countries, foreign workers going in and out of Malaysia, and students,” he added.

Clayton estimated that such international traffic would only account for about 500,000 people from June to December, which translates into less than 3,000 international passengers a day for Malaysia.

“Dramatically less than what we used to see,” he said, “who else will travel? Tourists will not travel if they have to spend two weeks in quarantine and business people will carry on doing video conferencing.”

According to Sobie Aviation Pte Ltd analyst and consultant Brendan Sobie, based on airlines’ figures, Malaysian carriers — Malaysia Airlines, Firefly, MASwings, AirAsia, AirAsia X and Malindo Airways — transported 64 million passengers last year.

Of the total, 28 million were domestic passengers, while the remaining 36 million were international flyers.

Malaysia’s total international market was 54 million passengers last year, which means local carriers had about two-thirds of the market share, while the remaining, or 18 million passengers, were carried by foreign airlines.

Considering AirAsia Group Bhd’s affiliates in the region, local airlines’ market share in the international market for the country would be close to 75%, Sobie said.

Sobie, one of the panellists at the EUMCCI’s webinar, said domestic market recovery will be faster, but on a more gradual scale over the next few months, with a full recovery similar to 2019 levels next year.

He said the country’s international market will gradually head for full recovery by 2022 or 2023.

“Airlines have to put themselves in hibernation for a while, especially with the international market, because they would not start returning for several months and even then it will be very slow.”

Sobie said airlines also have to be prepared and the government needs to show some support by putting in the right policies to reboot the international market, particularly in tourism.

Malaysia Airlines Bhd, AirAsia Bhd and Malindo Airways Sdn Bhd have resumed domestic flights amid the Movement Control Order as demand grows in line with the gradual relaxation of the restrictions.

The International Air Transport Association predicted that Malaysia could see passenger demand in 2020 reduced by 51%, a possible reduction of over 33 million passenger demand, with some US$4.2 billion (RM18.1 billion) revenue impact and over 220,000 potential job losses.

Source by The Malaysian Reserve