Malaysia 2017 aviation outlook: passenger growth may reach 15% as AirAsia, Malindo & MAS expand

Growth in Malaysia’s dynamic aviation market is set to accelerate in 2017 owing to aggressive expansion by all four of the main Malaysian carriers – AirAsia, AirAsia X, Malaysia Airlines and Malindo Air. The total passenger fleet in Malaysia is projected to grow 11% in 2017, and passenger growth could reach 15% as average aircraft utilisation rates at most of the airlines also increase.

The Malaysian market grew by 7% in 2016, to approximately 68 million passengers. Malindo Air captured the most growth, accounting for nearly half of the additional passengers. The Lion Group affiliate is again poised to account for nearly half of the total passenger growth in 2017, with more than four million additional passengers, although Malaysia Airlines, AirAsia and AirAsia X are also likely to carry at least one million additional passengers each.

Heavy discounting will be required in order to fill the additional seats and meet load factor and traffic targets. Fares in Malaysia are already very low and yields could decline further, particularly in 2H2017 when most of the additional aircraft are slated to be delivered.

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