IT could take three years for the airline industry – one of the worst-hit sectors in the Covid-19 crisis – to regain a degree of normalcy, said analysts.

They warned that a recovery to pre-pandemic levels may never happen, adding that the best-case scenario is a stable rebound in the next 18 months.

Shukor Yusof, founder of aviation consultancy Endau Analytics, told The Malaysian Insight that it is possible for the industry to stabilise within the period.

“With a bit of luck, 18 months for the situation to stabilise. A full recovery back to the days before Covid-19 may never happen, but (some semblance of) normalcy will take at least three years.

“Airlines will suffer as long as there is no cure for the virus.”

Another aviation analyst, who spoke on condition of anonymity, believes that air travel will not return to normal before 2022.

Transport Minister Wee Ka Siong said recently domestic air travel will take 18 months to recover from the impact of the virus, while the international market will need three years.

He said the Malaysian Aviation Commission (Mavcom) expects flight tickets to return to pre-pandemic prices by November.

The analyst interviewed said the government’s projection is reasonable and conservative, adding that potential challenges for the industry include a second wave and a decline in consumer confidence, which will impact airlines’ bottom line.

Malaysia Airlines, AirAsia

Shukor said the key to Malaysia Airlines Bhd (MAB) and AirAsia’s recovery is management competency and discipline.

“International flights will be the last to recover from the pandemic. The key to recovery for MAB and AirAsia is management competency and discipline.

“These two are severely lacking in MAB but abundant in AirAsia.

“How MAB and AirAsia perform depends much on what the government does now.”

He said no amount of money can turn flag carrier MAB profitable unless drastic measures are considered.

AirAsia, meanwhile, will struggle in the near term but will go on to be a viable company, said Shukor.

AmInvestment Research (AmInvest), citing data from FlightRadar24, said there has been some recovery in air travel, as indicated in the increase in daily global commercial flights since April with the easing of restrictions worldwide.

However, it said, as of end-June, the flight volume was only 40% of the figure recorded in the same period last year.

The research house noted that low-cost carrier AirAsia is expected to see a 35% rebound in passenger volume in 2021, in line with Mavcom’s projection of a 49% to 50% contraction in Malaysia’s air traffic passengers this year.

Bumpy recovery

AmInvest expects the airline industry’s recovery to be a bumpy journey, given the uncertainties surrounding the reopening of borders.

“We understand that airlines are struggling to plan their flight schedules (to ensure seats are filled) as now, passengers on average book their tickets only up to three days before departure, compared with 20 days and more previously.”

Not helping matters is the urgent need for airlines to recapitalise their balance sheets, having suffered massive losses during the pandemic, it said.

“Questions also arise if one airline will enjoy an unfair advantage over others should the government of the country of the airline’s incorporation offer more generous financial assistance than what’s offered by other governments to their countries’ airlines.”

News reports have suggested that Putrajaya has no plans to inject cash or offer soft loans to Malaysia-based airlines, although companies are free to tap loans guaranteed by Danajamin. – July 24, 2020.