Airlines continue recovery despite strong US dollar
PETALING JAYA: The elevated exchange rate between the US dollar and the ringgit may present short-term hurdles for local airlines due to their substantial US dollar expenses.
However, the airlines may also benefit from a high-yield airfare environment facilitated by dynamic pricing and the use of fuel surcharges to manage crude oil price fluctuations, said MIDF Research.
The research firm believes as the peak travel season approaches in the fourth quarter of 2023 (4Q23), traffic numbers are expected to continue rising, driven by year-end holidays, and offering room for the non-Asean sector to make up ground.
This growth will also be bolstered by Malaysia AirAsia’s (MAA) gradual reactivation of its full fleet that is slated to be completed in December 2023.
The research house said its passenger-traffic projections remain unchanged as it expects a recovery of 85% (domestic: 90%, international: 80%) this year.
“Our initial forecast for 2024 anticipates plus 4% growth in passenger traffic compared to 2019 levels, driven by local airlines expanding their fleets; the return of foreign airlines and a gradual resurgence of Chinese tourists,” it added.
In August this year, Malaysian airports saw over seven million passengers for the second month in a row, with airline seat capacity reaching 78.6% of pre-pandemic levels. This reflects a recovery of 79% (domestic: 83%, international: 76%).