As local airlines engage in cutthroat competition, Malaysia is forecasted to be Southeast Asia’s foremost country to witness its air travel industry bouncing back, resulting in potential overcapacity.
Brendan Sobie, an independent analyst and consultant from Sobie Aviation Pte Ltd, predicts that this fierce competition could catalyze a drop in airfares as early as 2024. However, prices might not dip down to the pre-Covid-19 levels.
He believes that, at least in Malaysia, the mismatch between supply and demand will soon cease to exist. As the supply-demand disparity shrinks, fares are anticipated to drop. Observing the local airlines’ capacity and fleet strategies, he speculates an overcapacity scenario unfolding in Malaysia by early 2024.
Due to the global lockdown, airlines worldwide had to ground their fleets, leading to a surge in airfares. Now, with borders reopening, air travel demand is escalating aggressively, outpacing the current supply due to aircraft shortages and seat limitations.
While airlines are working hard to bring supply back, they are challenged by obstacles like supply chain issues, fleet maintenance, overhaul, and manpower shortages.
MIDF Research reports that 6.7 million passengers travelled through airports operated by Malaysia Airports Holdings Bhd in March alone. This figure signifies a recovery of 75%, with domestic and international travel contributing 84% and 66%, respectively.
The firm noted that the domestic segment’s recovery remained above the 80% mark, with local airlines reintroducing and inaugurating new routes. The international segment, mainly fueled by Singapore, Indonesia, Thailand, India, China, and Japan, recorded 3 million passengers – the highest since the pandemic outbreak.
The total passenger movements for Q1 2023 was 18.7 million, indicating a recovery of 74% (domestic: 84%, international: 64%).
As the rivalry between Malaysia’s low-cost carriers, AirAsia and MYAirline, heats up, Brendan anticipates the competition to continue, which would prove beneficial for customers on competing routes. However, he cautions that not all fares will be low.
This month, AirAsia and MYAirline are intensifying their Kuala Lumpur-Bangkok routes promotion via social media, following MYAirline’s announcement of its new route to Thailand’s capital city commencing June this year.
This news piece is based on a recent article published by New Straits Times.