More than nine million passengers travelled in June

KUCHING: Passenger traffic in June 2019 for Malaysia Airports Holdings Bhd’s (MAHB) Malaysian operations reached nine million passengers, translating to a 6.7 per cent year on year (y-o-y) growth.

MIDF Amanah Investment Bank Bhd (MIDF Research) in its sector update saw that the last time passenger traffic numbers breached this level was last year in December.

This brings the first half of 2019 (1H19) passenger traffic numbers for Malaysian operations to 51.1 million.

The bulk of the increase in passenger traffic during 1H19 came from other airports, it said, which contributed more than 70 per cent to the expansion.

“We opine that the growth in non-KLIA airports was supported by MAHB’s hub-and-spoke model which aims to bring global traffic to smaller airports and vice versa,” it said.

“For example, Britain’s TUI Airways and Kazakhstan’s Sunday Airlines have been operating from the Langkawi International Airport since late last year.

“Existing airlines such as Malindo Air have commenced its Langkawi-Phuket route in late March this year.”

Meanwhile, the festive season boosted air travel demand for both domestic and international.

Domestic traffic at Malaysian airports recorded a robust growth of 8.2 per cent year on year (y-o-y) in 1H19 to hit 25.1 million passengers, versus the 0.9 per cent y-o-y decline in the preceding year.

This was mainly attributable to June’s domestic passenger movement which registered a record high of 4.6 million passengers, MIDF Research said.

“It was notable that the Aidilfitri holidays fell on June 5 and 6, 2019 which coincided with the second week of school holidays, propelling a higher level of demand for air travel.”

Meanwhile, the international traffic at MAHB grew at a measurable pace of 1.6 per cent y-o-y to hit 26 million passengers in 1HCY19.

This level of international passenger numbers has never been observed before for the first half of the year, MIDF Research said.

“The occurrence of summer holidays for the US and certain cities in Germany such as Berlin was an underpinning factor for the growth in international traffic,” it explained.

“International passenger mix remains favourable at above 50 per cent.

“Although growth in the domestic sector outpaced the international sector for 1HCY19, international passenger movements continued to retain more than 50 per cent of the passenger mix.”

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

Air Arabia began its flight services to KLIA Main Terminal in early July 2019 while Qatar Airways will be extending its Doha-Penang services to Langkawi in October 2019.

“We believe the stronger mix of international passengers could be maintained. This bodes well for MAHB in terms of the higher passenger service charges (PSCs) collected for international passengers.

“The prospect of the aviation sector remains upbeat coming into 2HCY19. We opine that MAHB’s innovative efforts such as the Joint International Tourism Development Programme (JITDP) with Tourism Malaysia will facilitate airlines in promoting Malaysia overseas.

“This, in turn, would bode well for MAHB’s strategy to attract more airlines and increase connectivity which will moderate effects of the international departure levy and possibly higher PSCs.

Meanwhile, LCCs such as AAGB and AirAsia X are strengthening their presence in core markets while establishing new hubs in destinations such as Lombok. This will continue to attract higher passengers in 2019 and will benefit MAHB.

“Overall, we believe that the RAB framework will ensure a fair cost to airport users while maintaining a fair level of returns to MAHB as it increases clarity between revenue and capital investment.

“Therefore, we strongly believe that MAHB passenger numbers for Malaysian operations can surpass the 100 million mark in 2019, while maintaining a relatively conservative growth rate of 3.5 per cent at approximately 102.5 million passengers.”