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PETALING JAYA: The business and leisure air travel sector will continue to recover throughout the year with activity poised to return to pre-pandemic levels in 2024.
Kenanga Research expects more people to take to the skies, which in turn will help airlines profitability.
However, it says that aviation sector players have their own set of issues to resolve to fully benefit from the rising demand in air travel.
For 2024, the research firm projects tourist arrivals to jump further by 24% to 20 million, compared to pre-pandemic level of 26 million.
Tourist arrival in Malaysia according to Tourism Malaysia is expected to jump 60% to 16 million this year from about 10 million a year ago.
A key driver is Chinese tourists that historically made up about 12% of total tourist arrivals in Malaysia.
These should underpin growth in Malaysia Airports Holdings Bhd
(MAHB) passenger throughput demand in 2023, according to Kenanga Research.
Meanwhile, the research firm expects Capital A Bhd’s system-wide revenue seat km to grow 79% to 43 billion in financial year 2023 (FY23), after recovering by 20 billion to 24 billion in FY22.
“Capital A expects its passenger demand to continue to rise, moving further into 2023, judging from the encouraging load factors recorded at 159 international routes.
By the end of 2023, the group is targeting to have all its 215 aircrafts deployed to cater for the rising demand,” it said.
While, its digital segment is expected to remain loss-making, airasia Super App is expected to grow, underpinned by the continued resurgence of travel demand from borders reopening and tactical campaigns.
“Additionally, Teleport is expected to continue expanding throughout 2023 as it adds new international lanes and delivery hubs.
“BigPay has also launched its digital lending platform to provide new loan products.”
The research house has a “neutral’’ rating on the aviation sector with a RM7 target price for MAHB and 84 sen for Capital A.
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