Can AirAsia leverage Visit Malaysia Year 2020 for growth?

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AirAsia is Expected to Benefit from Visit Malaysia Year 2020

AirAsia Group Bhd (AAGB) is anticipated to leverage the increased tourism activity associated with Visit Malaysia Year 2020 to enhance its market position. This strategic advantage is projected to enable AAGB to capture market share from Malaysia Airlines Bhd (MAB) and potentially increase its own domestic market share to approximately 60 per cent. The airline's fleet expansion plans within Malaysia are a key component supporting this anticipated growth trajectory.
Fleet Expansion to Support Market Share Gain

AAGB's Malaysian subsidiary, Malaysia AirAsia (MAA), is scheduled to receive new aircraft in 2020 that will bolster its capacity. Specifically, MAA expects the delivery of three A321 Neo aircraft, each with a seating capacity of 236 passengers, and one A320 Neo with 186 seats. This influx of new capacity contrasts with Malaysia Airlines Bhd's (MAB) situation, which has suspended the delivery of its 25 Boeing 737 MAX aircraft, creating an opportunity for AAGB to expand its presence.
Increased Tourism Activity to Drive Passenger Traffic

The anticipated surge in tourism during Visit Malaysia Year 2020 is a significant factor expected to benefit AAGB. MIDF Research believes that the airline is well-positioned to attract a greater number of passengers, thereby increasing its market share from MAB. This aligns with the broader objective of Visit Malaysia Year 2020 to boost the country's tourism sector and related industries.
Positive Impact on KLIA2 Passenger Traffic

The projected increase in AAGB's market share is expected to translate into a positive impact on passenger traffic at Kuala Lumpur International Airport 2 (KLIA2). MIDF Research foresees AAGB continuing to be a primary draw for passengers utilising KLIA2 throughout 2020, reinforcing the airport's role as a hub for low-cost travel. This sustained passenger flow is crucial for the operational success of both the airline and the airport.
Departure Levy's Immaterial Impact

Despite the implementation of a departure levy in September 2019, MIDF Research maintains its positive outlook for passenger growth in Malaysia. The research house notes that the levied amounts are lower compared to regional benchmarks such as Thailand and Hong Kong. For low-cost carriers like AAGB, the departure levy represents a small fraction, averaging around 1.6 per cent of the total ticket price for normal fares, thus having an immaterial impact on passenger demand.

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Can AirAsia leverage Visit Malaysia Year 2020 for growth?

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