Wednesday, 13 June 2018

(NST) Subdued passenger traffic in May reversed in June

KUALA LUMPUR: Passenger traffic at the airports managed by Malaysia Airports Holdings Bhd (MAHB) has been subdued in May and April but analysts expect it to rebound this month.

There was a 3.5 per cent traffic contraction year-on-year to 7.7 million passengers last month. Over the five-month period, however, the traffic grew 4.3 per cent.

MIDF Research said the lower May volume was mainly due to seasonally subdued air travel demand during the Ramadhan fasting season as well as shift in school holidays.

“While we note that overall traffic has experienced a slowdown since April, we believe it will rebound in June 2018 and will provide support to the first half of 2018’s traffic,” it said in a report today.

The firm noted that international sector was slightly down, while domestic traffic declined by a larger magnitude, contracting by 6.4 per cent year-on-year to 3.7 million passengers.

“International passengers were flattish at -0.6 per cent year-on-year but we expect the momentum to rebound in June, buoyed by key events, namely Eid-fitr, two-week school holidays in Malaysia and summer holidays for countries in the northern hemisphere.,” it explained.

MIDF Research said including Istanbul’s Sabiha Gokcen Airport (ISG), MAHB’s total traffic had declined 2.3 per cent year-on-year. Excluding the traffic of airports in Malaysia, ISG continued to chart positive pprogress, although tepid, at 1.5 per cent year-on- year.

“Both international and domestic sectors at ISG grew at similar rate of about 1.3 per cent and 1.8 per cent year-on-year respectively. Evidently, growth was only marginal, also affected by , the Ramadhan fasting month.

“While the air travel activities in May have not been upbeat, we are expecting the growth of ISG traffic to recover in June, benefiting from worldwide seasonal factors,” it said.

Kenanga Research said the anticipated Quality of Service (QoS) framework to be implemented by Malaysian Aviation Commission from the third quarter 2018 for airports (starting with KLIA and klia2) could pose as downside risks for MAHB’s earnings.

With QoS being aimed at achieving higher quality of service for passengers, Mavcom proposed a financial penalty of up to five per cent of aeronautical revenue.

This, Kenanga Research said, could dent its core net profit forecast for MAHB by seven per cent for every one percentage point penalty.

In order to mitigate any penalties, MAHB had increased its planned capital expenditure to RM600 million and RM700 million from typically RM300 million in financial years 2018 and 2019 to upgrade its infrastructure including trains, baggage systems and toilets.