AirAsia and MAHB the engine growth for local aviation sector

2019.07.23 15:14:34

Local aerospace industry is poised to remain vibrant and thriving in years to come fuelled by the growing demand for commercial aircraft in Asia Pacific region. File pix이미지 확대

Local aerospace industry is poised to remain vibrant and thriving in years to come fuelled by the growing demand for commercial aircraft in Asia Pacific region. File pix

Local aerospace industry is poised to remain vibrant and thriving in years to come fuelled by the growing demand for commercial aircraft in Asia Pacific region.

MIDF Research aviation analyst Adam Mohamed Rahim said local airlines such as AirAsia Group Bhd were expected to contribute to the nation`s aerospace industry with its long-term fleet plan focusing on maintaining its lead in Asean.

"Therefore, it is crucial for Malaysia to secure more design and build work packages and become a risk sharing partner with original equipment manufacturers from the early stages of the aircraft`s life cycle," he said in a research note.

Adam said Malaysia`s exports of aircraft parts and components had almost quadrupled from RM2.23 billion in 2012, recording RM8.49 billion in 2018 or contributed more than 1.0 per cent to Malaysia`s total trade value for the past eight years.

"The growth was mainly driven by expansion of aerospace manufacturing activities which also translated to the increase of revenue of Malaysia`s aerospace industry.

"Locally manufactured aerospace products for export mainly include fan cowl, fan casing, thrust reverser, forward leading edge, aircraft door, avionics equipment and carbon brakes," he added.

For 2018, Malaysia achieved a total approved investment of RM816.3 million in 2018 for 11 aerospace projects, of which 41 per cent were foreign investment.

Adam said the continued growth of the aerospace sector aligned with the milestones charted by the Second Malaysia Aerospace Industry Blueprint (2015-2030), which aims to generate annual revenue of RM55.2 billion and create more than 32,000 high income jobs.

He said the Asean region was likely to be the engine growth of the maintenance, repair and overhaul (MRO) spending between 2019 and 2029.

He noted that Asia Pacific would become the second largest MRO spending after Western Europe by the end of 2024.

It was reported that Asean region recorded around US$14 billion worth of aircraft parts and related services in 2018.

"Narrow-bodies (aircraft) are expected to make up the majority of MRO market share at more than 50 per cent, followed by wide-bodies, regional jets and turboprops," he added.

He said the trend for narrowbodies was aleady prevalent in Asean with AirAsia group`s placing 253 orders for Airbus` A321neo model, the world`s largest customer for the model.

"The preference of narrow-bodies comes by amid expectation of higher air travel demand within Asia especially in Asean, prompting low cost carriers to bump up capacity," he said.

He said air travel across Southeast Asia was growing by around 10 per cent a year, due to rising consumer affluence as well as continuous efforts to liberalise air traffic regulations.

"It is expected that the middle class population in the region will rise from 29 per cent in 2010 to 65 per cent by 2030," he said.

Adam expects Malaysia Airports Holdings Bhd (MAHB) to be a major beneficiary of a growing aerospace industry given its ample landbanks over 9,000 hectares and 430 hectares surrounding the Kuala Lumpur International Airport (KLIA) and Subang Airport respectively.

"In the short term, we believe MAHB will continue to gain from the expected growth in passenger traffic which is expected to surpass the 100 million mark for Malaysian operations in throughout 2019."

He said MAHB was also the key agent in driving the growth for Malaysia`s aerospace industry, banking on its business diversification via the development of Aeropolis to stimulate economic activities.

"Aerospace is one of the mediums identified aside from logistics and leisure segments to be developed within 115 acres allocated for the KLIA Aerotech Park and also 58 acres at the Subang Aerotech Park."

MIDF Research maintained a "positive" call on the local aviation sector with optimism on the potential growth in the aerospace industry.

https://www.nst.com.my/business/2019/07/506320/airasia-and-mahb-engine-growth-local-aviation-sector

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