PETALING JAYA: The rise in air travel activities with the introduction of the Langkawi travel bubble and the ease of interstate movement is expected to spur domestic traffic at all Malaysian airports.

       However, international air traffic will still remain muted until more countries open up their borders.

       Airport operator Malaysia Airports Holdings Bhd (MAHB) is hopeful of a recovery in air travel with more people being vaccinated so that it can sustain the traffic and its earnings.

       For September, the airports managed by MAHB recorded passenger movements of 458,000, of which close to 80% came from the domestic sector.

       TA Research said that overall, traffic for September marked an encouraging recovery with a significant month-on-month growth of 54.8%, thanks to the launch of the Langkawi travel bubble on Sept 16.

       It said traffic declined by 73.2% year-on-year (y-o-y) as traffic for September 2020 was spurred by the Sabah state elections.

       For the first nine months of the year, the decline in passenger movements moderated to 83.3% compared to 84.1% a month ago, to four million.

       This only accounted for 20% of TA’s 2021 estimates of 19.3 million passengers for the year.

       However, it is of the view that its 2021 traffic projections are still achievable, as the lifting of interstate travel ban on Oct 11 for fully vaccinated individuals and the reopening of international border soon for foreign tourists are expected to drive traffic in the fourth quarter of this year.

       TA said that in the international sector, airlines are gradually increasing their weekly frequencies. Sri Lankan Airlines added one weekly flight to Colombo while Malaysia Airlines resumed its Bangkok services.

       Cebu Pacific Air resumed operations in October while Malindo Air, Jetstar Asia, Emirates and Biman Bangladesh have also increased their weekly frequencies to KL International Airport.

       It said 36 airlines have resumed their services in Malaysia by September.

       Most countries are still closing their borders to tourism to control the Covid-19 pandemic. However, with rising vaccination rates, some of these countries have looked into reopening this year, including Malaysia.

       In fact, some have already launched pilot projects to assess the impact of the pandemic when reopening their borders.

       For instance, Thailand has reopened Phuket, Krabi, Suratthani and Phang-Nga under the sandbox model – a requirement to stay on any of these islands for seven days before travelling to other places in Thailand.

       Singapore reopened to fully vaccinated tourists from Germany and Brunei in September, quarantine free. Malaysia has a test run on its travel programme with the Langkawi travel bubble, which is restricted for fully-vaccinated Malaysians before opening it to foreign tourists.

       The potential opening of borders will certainly bode well for MAHB. However, the research house has yet to make any changes to its traffic forecast and is maintaining its financial year 2021-2023 earnings projections.

       “The recent price weakness represents a good buying opportunity for sustained traffic recovery,” it said.

       On that note, it upgraded MAHB to a “buy’’ from “hold” with an unchanged target price of RM7.49 per share.