Malaysia aviation outlook Part 1: growth slows but competition is still intense as MAS restructures

Passenger traffic growth slowed significantly in 2014 as Malaysia's airline sector adjusted fleet and capacity plans in response to challenging market conditions. Passenger numbers grew less than 5% in 2014 and growth is expected to again be in the low single digits in 2015 as further adjustments are implemented, including anticipated capacity cuts at Malaysia Airlines (MAS).

Medium/long-haul low-cost carrier Malaysia AirAsia X is also cutting capacity in 2015 as part of its own restructuring. Both Malaysia AirAsia X and short-haul sister carrier Malaysia AirAsia are reducing their fleets in 2015 although the latter will still pursue modest capacity growth by improving aircraft utilisation. Lion Group's Malaysian affiliate Malindo Air is still expanding rapidly but on a much smaller base.

This is the first instalment in a report on the Malaysian market and the outlook for 2015. This part will focus on MAS and the recent reduction in passenger numbers in Malaysia. The second part will focus on AirAsia and AirAsia X.