PETALING JAYA: Kenanga Research is projecting tourist arrivals in the country to jump four-fold to 9.6 million in 2023 from an estimated 2.5 million a year ago on the back of the reopening of international borders.

It said the increase would be driven by the return of both business and leisure air travel globally, the revocation of all on-arrival quarantine and testing requirements in Malaysia and eventual gradual reopening of China which historically accounts for an estimated 12% of the total tourist arrivals in Malaysia.

These factors would support growth in the passenger throughput of Malaysia Airports Holdings Bhd (MAHB) and the passenger demand of Capital A Bhd (formerly known as AirAsia Group Bhd), it said.

“We project MAHB’s system-wide passenger throughput to rise 29% and 15% to 101 million and 116 million in 2023 and 2024, respectively, but it is still a long way from matching the pre-pandemic level of 141 million recorded in 2019.

“Similarly, we project Capital A’s system-wide revenue passenger kilometres (RPK) to grow by 52% to 35 billion in 2023, but this still falls short of the pre-pandemic RPK level of 63 billion in 2019,” Kenanga Research said in its Sector Update note today, where it reiterated its “neutral” call on the aviation sector,

Meanwhile, it noted that MAHB’s much-needed tariff hike does not appear to be forthcoming, while a regularisation plan is underway to lift Capital A out of its Practice Note 17 (PN17) status.

“Despite the rising demand, we expect Capital A to remain in the red over the short term as economies of scale are still lacking in its airline operations while its digital business has a long gestation period.

“The group plans to divest its aviation group to AirAsia X in exchange for shares which will subsequently be distributed back to its shareholders,” it said, adding details of the regularisation plan are expected to be announced by end-January or early February 2023, with completion by July 2023

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