Urgent need for more air transport facilities, says Iata

This article first appeared in The Edge Financial Daily, on December 7, 2017.
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GENEVA: Governments around the world are not doing enough in meeting aviation infrastructure needs, the International Air Transport Association (Iata) said, calling for greater urgency to ensure infrastructure matches demand.

Iata director-general and chief executive officer Alexandre de Juniac said governments should work with the industry to plan and build the requisite infrastructure to ensure their economies reap the gains from a growing global air transport industry.

“There is no time to lose. Governments are not meeting their responsibility to provide sufficient infrastructure for the industry to meet demand,” he told a media briefing on Iata’s industry outlook update for 2018 here on Tuesday.

“The infrastructure challenge also includes airports. Airport infrastructure is not being built fast enough to cope with growth,” he said, adding that airports must be aligned with user needs for quality and technical specifications. “And affordability is key.”

The global airlines’ grouping is expecting airlines to carry 4.3 billion passengers in 2018, 5% more than the 4.1 billion expected in 2017.

In terms of revenue per passenger kilometre, it expects airlines to see 6% growth year-on-year (y-o-y) in 2018. That is a faster expansion than the 5.7% y-o-y growth forecast for available seat kilometres next year, which it said will likely increase average load factors to a record 81.4% and boost yields by 3%.

Infrastructure strains are also felt in the Malaysian aviation industry. In August, the Malaysian Aviation Commission (Mavcom) highlighted in its inaugural Waypoint report that seven airports in Malaysia are operating above their theoretical terminal design capacities in 2016.

Another five airports have exceeded 80% of their terminal design capacities that year, according to Waypoint.

“There is currently a mismatch between terminal design capacity and actual passenger traffic being handled by the airports in Malaysia. Significant capital expenditure in the short- to medium-term is required to address capacity requirements,” Mavcom said in the report on the local aviation industry’s outlook.

For 2017, Mavcom expects the Malaysian air passenger traffic volume to grow by between 7.8% and 8.8% y-o-y, translating into a forecast volume of between 98.3 million and 99.2 million passengers.

In an August interview, Datuk Mohd Badlisham Ghazali, the managing director of Malaysia Airports Holdings Bhd — which operates 39 out of 40 existing Malaysian airports — had told The Edge Malaysia weekly that Langkawi will see its capacity expanded to four million passengers per annum (mppa) by October 2018 from 1.5 mppa currently at a cost of RM80 million.

The Sultan Ismail Petra airport in Kota Baru is also slated for upgrade works to begin sometime in 2018, he added.

In a Nov 17 report, Nomura Research forecast that local Malaysian carriers (Malindo Air, Rayani Air, Malaysia Airlines, Firefly, MASwings, AirAsia and AirAsia X) to see their combined fleet grow 9% to hit 270 planes this year and to reach 290 planes in 2018.

“Growing at a five-year compounded average growth rate of 10%, we estimate that Asean airports handled as many as 654 million passengers in 2016, which is collectively bigger than the traffic of both China and India combined,” said Nomura.

For perspective, the US air travel traffic counted just over 800 million passengers in 2016, it added.

Malaysia represents the third-biggest passenger traffic market in Asean as well as the third most connected in terms of international destinations, according to Mavcom. Passengers flying out of Malaysia via direct and indirect flights have access to 116 international destinations, behind Singapore’s 153 and Bangkok’s 151.

Nomura says the proliferation of air travel and aggressive expansion by low-cost carriers presents encouraging growth momentum outlook ahead to boost passenger traffic.