Competition in Malaysia’s domestic market will intensify in 2016 as Malaysia Airlines resumes growth and start-up Rayani Air expands. The Malaysian domestic market should experience significantly faster growth than 2015 but yields will be under pressure, impacting profitability.
Malaysia’s domestic market grew by only 2% in 2015, marking the slowest rate of growth since 2006. The market has more than doubled in size since 2003, driven by expansion from AirAsia.
Malaysia Airlines domestic traffic has dropped significantly over the last six months and total domestic capacity in Malaysia is currently below year ago levels. But Malaysia Airlines expects to resume growth after opening seven new bases in secondary cities and introducing a new domestic schedule in Apr-2016. Meanwhile Rayani will begin competing on already crowded domestic trunk routes, joining AirAsia, Malaysia Airlines and Malindo Air.
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