Mavcom anticipates up to 50% contraction in passenger traffic

PETALING JAYA: The Malaysian Aviation Commission (Mavcom) has projected that passenger traffic would contract 48.7-50.3% year-on-year (yoy) in 2020 due to the Covid-19 pandemic, an increase from a 36.2-38.1% contraction projected in March.

It noted that the first five months of the year saw 19.6 million passengers, which reflects a 55.2% drop 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 Covid-19. This includes the implementation of the nationwide movement control order (MCO) in Malaysia effective March 18, 2020,” said Mavcom in its seventh edition industry report Waypoint.

It explained that the restriction 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.

In total, Mavcom estimated a 35.2% cancellation in domestic seats and a 42.9% cancellation in international seats scheduled for the year, 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, which is higher than its previous estimate of 31.0 million seat cancellations in 2020.

The commission noted that carriers are expected to continue to adjust their seat capacity in response to the various factors surrounding travel demand and restrictions.

For the year, it revealed that Malaysian carriers have cancelled a total of 29.6 million seats as at early June 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, Mavcom estimated that the revenue-at-risk for 2020 by both domestic and foreign carriers to be at RM11.3 billion and RM4.6 billion, respectively, compared to a previous estimate of RM6.8 billion and RM5.0 billion.

Collectively, the figure represents 51.1% of estimated total airfare revenue in 2019.

As for aerodrome operators, the commission estimates that revenue derived from passenger service charges (PSC) that are at risk is RM500 million, an increase from its earlier estimate of RM400 million, representing 33.4% of total PSC revenue in 2019.

Its executive chairman Datuk Seri Saripuddin Kasim commented that the impact of the pandemic to the aviation industry has been extremely severe and as there is 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,” he said in a statement.

Saripuddin elaborated that 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-recommended safety measures vis-à-vis managing Covid-19 for air travel could go some way towards reinvigorating the industry,” he said.

source https://www.thesundaily.my/business/mavcom-anticipates-up-to-50-contraction-in-passenger-traffic-FL2629689