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Malaysia Airports' outlook worsens - Minister

Malaysian Transport Minister, Ong Tee Keat, has warned passenger traffic at the country's airports could slow in line with pressure on the national economy, citing weakness in traffic throughput in recent months. Mr Ong stated, "the downturn is the overall scenario that we should have in mind".

The caution seems to have played out on Malaysia Airports' share price, which dipped 4.4% yesterday.

Selected airports daily share price movements (% change): 26-Nov-08

But the company's investors can take heart from:

  • AirAsia's continued expansion within ASEAN and beyond;
  • The high profile launch of a new service to London Heathrow by low cost long-haul innovator, AirAsia X
  • The imminent opening of Singapore-Malaysia skies and a rapid increase in capacity by LCCs on both sides;
  • Thailand's political problems, which could shift travel to competing destinations such as Malaysia; and
  • Malaysia Airlines' recent commitement not to scrap routes in the current economic slowdown, but to make seasonal adjustments to its capacity.

Overall, Malaysia is well positioned in the current downturn, but an air of caution is probably not a bad thing from the top.