KUCHING: Maybank Investment Bank Bhd (Maybank IB) is optimistic about the Malaysian aviation sector ahead of the 15th General Election (GE15), stating that the election will “add fuel to the industry’s resurgence.”
A Bernama report quoted the research house expecting GE15 to have a long term positive impact on passenger traffic and a short term positive impact on airfares.
“History has taught us that passenger traffic tends to rise during GEs as voters return to their voting constituencies to vote.
“This is especially true for voters whose voting constituencies are across the South China Sea in Sabah and Sarawak.
“There was also growth in airfares during other GEs but they did not last long,” it said in a research note.
It added that the GE15 is predicted to favour Capital A Bhd against Malaysia Airports Holdings Bhd (MAHB).
For MAHB, it noted that domestic passenger traffic grew 18 per cent in GE13 and 3 per cent during GE14 in 2018, while Capital A, the operator of AirAsia, saw its Malaysian operation’s passenger traffic rise 11 per cent in both GE13 and GE14.
“We expect GE15 to exhibit similar trends. What intrigues us further is that the rise in passenger traffic in the past appeared to be structural.
“In other words, passenger traffic did not ease post-GEs but stabilised or even continued growing,” the research firm noted.
However, it believes that GE15’s impact on the industry would be less significant this time as voter turnout will be lower than in GE13 (80%) and GE14 (76%), as states controlled by Pakatan Harapan and the Islamic party PAS would not dissolve their state assembly.
Furthermore, it noted that Sabah and Sarawak had already held their respective state elections in September 2020 and December 2021 respectively, and voters may be discouraged from flying to their voting seats due to current expensive airfares.
“Nonetheless, we maintain our ‘buy’ calls and target prices for MAHB and Capital A at RM7.25 and 84 sen respectively, and retain our positive view on the Malaysian aviation sector,” it added.
