(File pix) The local aviation sector is set to fly higher this year as analysts expect passenger traffic to grow six to seven percent on the back of strong economic growth and new aircraft deliveries.

THE Malaysian aviation sector can expect rising air travel demand this year, fuelled by improved consumer sentiment and better economic outlook, say analysts.

They expect passenger traffic growth of up to seven per cent despite concerns over rising fuel prices.

About 96.54 million passengers used local airports last year, up from 88.98 million passengers in 2016.

Maybank Kim Eng analyst Mohshin Aziz expects passenger traffic growth of six to seven per cent, based on the expected five to six per cent gross domestic product (GDP) expansion this year.

“Based on the expected GDP growth, we anticipate passenger traffic growth at six to seven per cent this year. This will also be fuelled by the fact that most airlines are taking more aircraft this year,” Mohshin told NST Business yesterday.

Malaysia Airlines Bhd reportedly said it was expecting to receive four more Airbus A350 XWBs by March, while Malindo Air announced that it was receiving several additional 737 MAX planes, including larger
737 MAX 9s, during the year.

MIDF Amanah Investment Bank Bhd Research (MIDF Research) expects the traffic growth to remain in positive territory, albeit at a relatively conservative four per cent on higher international passengers.

The subsequent positive effects — net addition of aircraft and higher utilisation rates by airlines — will benefit airport operator Malaysia Airports Holdings Bhd, said MIDF Research.

Among industry players, it expects Malaysia Airlines to see three per cent year-on-year
traf-fic growth while AirAsia Bhd could have the biggest growth of 12 to 15 per cent.

Malindo Air may see growth of five to 10 per cent and AirAsia X Bhd, eight to 10 per cent.

“We expect the additional capacity to be well absorbed by the growth in demand, especially from the locals, due to improving consumer sentiment and better economic outlook,” said MIDF Research.

Hong Leong Investment Bank Bhd expects continued growth in air travel demand this year, with overall capacity growth in the system to be at six to seven per cent year-on-year.

It also imputed passenger traffic growth of six and 4.8 per cent for MAHB for this year and 2019, respectively.

“It will be driven by international traffic from the rebound in tourist arrivals and continued strong demand from Malaysians, especially for overseas travelling, as consumer sentiment continues to improve,” it added.

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