Price war between low cost carriers in Malaysia feared will further reduce profit margins

Malaysia’s GDP grew by 5.4% in the second quarter of fiscal year 2012 backed by reviving exports. There was a six months lull in passenger traffic in the Malaysian aviation industry.
By: Emerging Markets Direct
 
Oct. 23, 2012 - PRLog -- It grew by 4.2% during the first half of FY12, which was lower than the figures recorded in last few years.


Low cost carrier AirAsia gained a significant edge over its government backed competitor Malaysia Airlines in terms of passenger traffic share. AirAsia outperformed the two other major Malaysian carriers in terms of load factor and revenue passenger kilometers. In the first half of 2012, Malaysia Airlines led the aviation industry in terms of revenue realized, but continued to suffer losses. The government carrier hasn’t registered profits in the last six quarters. On the other hand, AirAsia maintained its profitability during the first half of the year. Though its Malaysian operations were under slight pressure, the gains made by offloading some of its stake in Thai AirAsia enhanced its net profit handsomely. Malaysia Airports Holding Berhad continued its show of strong financial performance in the first half as well. The company raised capital by way of private placement and is looking forward to expansion in its operation.

The outlook for Malaysian aviation is positive as far as low cost carriers are concerned, which is further exemplified by the AirAsia’s profits. The emergence of Malaysia as an aviation hub in this part of the world, can add to the profits of airport management companies. However, the arrival of new carriers can start price wars, which may bring down the profit margins throughout the whole aviation industry.
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Source:Emerging Markets Direct
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Zip:50450
Tags:Airasia, MAHB, Malaysia, Malaysia Airlines (MAS), Lion Air
Industry:Research, Reports
Location:Kuala Lumpur - Kuala Lumpur - Malaysia
Subject:Reports
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