KUALA LUMPUR: The demand for business and leisure air travel is expected to continue to recover throughout the year, Kenanga Research said.

The stronger-than-expected recovery in the demand for air travel and yields was reflected in a sequential improvement in the sector’s earnings delivery in the recently-concluded March reporting results.

Kenanga Research expects sectoral activity to return to pre-pandemic levels in 2024.

“According to Tourism Malaysia, tourist arrival in Malaysia is expected to jump 60 per cent to 16 million in 2023 from an estimated 10 million a year ago.

“A key driver is Chinese tourists that historically contributed to an estimated 12 pet cent of total tourist arrivals in Malaysia.”

The firm expects tourist arrivals to jump further by 24 per cent to 20 million next year compared to pre-pandemic level of 26 million.

This should underpin growth in Malaysia Airports Holdings Bhd’s passenger throughput demand in 2023.

Amplifying traffic growth trajectory is aircraft movements that are pointing towards increased medium and long-haul flights to Perth,  Sydney and Auckland, Southeast Asia and South Asia destinations.

The firm noted that KL International Airport saw the return of Kuwait Airways after a seven-year hiatus, while two other foreign carriers i.e. KLM Royal Dutch Airlines and All Nippon Airways, will resume non-stop flight operations to Amsterdam and Tokyo,l respectively, after temporarily ceasing operations due to the Covid-19 pandemic.

In addition, Malaysia Airlines has increased its flight frequency to Tokyo from November 2022.

AirAsia Group, meanwhile, is focusing on its medium-haul operations by increasing its Malaysia AirAsia X flights.

Kenanga Research has no top pick of the sector but tags MAHB as a “Market Performer” with RM7.00 target price.

It also deems Capital A Bhd a “Market Performer” with a target price of 84 sen.

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