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Passenger Traffic in 2020 Estimated to Reduce Between 48.7 Per Cent and 50.3 Per Cent Year-on-Year f

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Passenger Traffic in 2020 Estimated to Reduce Between 48.7 Per Cent and 50.3 Per Cent Year-on-Year from Record High in 2019

The Malaysian Aviation Commission (MAVCOM) published today the seventh edition of its Industry Report, Waypoint. The report provides an overview of the performance of the Malaysian aviation sector in 2019 and the outlook for 2020.

In the March 2020 edition of Waypoint, MAVCOM forecasted that passenger traffic this year would contract by between 36.2 per cent and 38.1 per cent year-on-year (YoY) as a result of the COVID-19 pandemic. Following recent developments, the Commission has revised its forecast to a decrease of between 48.7 per cent YoY to 50.3 per cent YoY, which translates to between 54.3 million and 56.0 million passengers this year.

19.6 million passengers were recorded in the first five months of 2020, which reflects a drop of 55.2 per cent YoY in passenger traffic. The decline in passenger traffic was largely attributable to the travel restrictions imposed as part of measures taken by countries worldwide to contain the spread of COVID-19. This includes the implementation of the nationwide Movement Control Order (MCO) in Malaysia effective 18 March 2020.

These restrictions, contributed to the cancellation of flights by both Malaysian and foreign carriers, with many passengers either unable and some choosing not to travel by air. The Commission estimates a cancellation of 35.2 per cent in domestic seats and 42.9 per cent in international seats scheduled for 2020, equivalent to a total of 44.8 million seats. As at early June 2020, 38.8 million seats had already been cancelled by local and foreign carriers, higher than MAVCOM’s previous estimate of 31.0 million seat cancellations in 2020.

Carriers are expected to continue adjusting their seat capacity in response to the many factors surrounding travel demand and restrictions. As at early June 2020, Malaysian carriers have cancelled a total of 29.6 million seats in 2020 compared to 28.3 million seats at end-May 2020. Likewise, foreign carriers operating to and from Malaysia are also reducing their seat capacity – a total of 9.2 million seats have been cancelled in 2020 as at early June compared to 8.5 million at end-May.

Consequently, the revenue-at-risk for 2020 by Malaysian and foreign carriers is estimated to be RM11.3 billion and RM4.6 billion, respectively (previous estimates: RM6.8 billion and RM5.0 billion), which collectively represents 51.1 per cent of estimated total airfare revenue in 2019. As for aerodrome operators, MAVCOM estimates that revenue derived from Passenger Service Charges (PSC) that are at risk is approximately RM0.5 billion (previous estimate: RM0.4 billion). This amount represents 33.4 per cent of total PSC revenue in 2019.

YBhg. Datuk Seri Saripuddin, Executive Chairman of MAVCOM said, “The impact of COVID-19 on the aviation industry has been extremely severe, and with no comparable precedent, the rate of recovery for the industry will be difficult to predict. The current relaxation of movement restrictions within Malaysia, however, should facilitate faster recovery for the domestic market. Immigration controls and quarantine measures in Malaysia and elsewhere, alongside passenger willingness to travel by air during this period, will also influence how quickly the overall industry will return to pre-COVID-19 levels. The safe re-introduction of international travel and the adoption of the International Civil Aviation Organization (ICAO)-recommended safety measures vis-à-vis managing COVID-19 for air travel could go some way towards reinvigorating the industry.

This press release was sourced from MAVCOM on 26-Jun-2020.