Khazanah Nasional Bhd has confirmed its commitment to continue supporting Malaysia Airlines Bhd, via its parent company Malaysia Aviation Group Bhd. The support is considered as the 'strategic needs’ of Malaysia to maintain air links amid the COVID-19 crisis.

The airline is an important mode of transportation for tourism with multiplier effects on the local economy, contributing the third-largest in gross domestic product (GDP).

According to Tourism Malaysia data, Malaysia’s economy was boosted with a total of RM84.1 billion in tourist receipts backed by expenditure from 25.83 million international tourists who visited Malaysia throughout 2018. For the first nine-month of 2019, international tourist arrivals increased 3.7 per cent year-on-year (YoY) to 20.1 million and tourist expenditure increased 6.9 per cent to RM66.14 billion.

To cope with the tough conditions, local airlines recently initiated cost-cutting measures including voluntary unpaid leave as well as top management’ salaries cut and the abolishment of allowances.

International Air Transport Association (IATA) said the local airline industry could wipe out about US$3.32 billion (RM14.46 billion) in revenue and US$3.80 billion (RM16.55 billion) in potential GDP contribution to Malaysia’s economy this year.
IATA cautioned that the losses would likely be incurred if the government did not financially support the local airline sector, impacted by the COVID-19 crisis.

IATA, which represents about 290 airlines comprising 82 per cent of global air traffic, said the airline industry’s cash position could deteriorate by US$61 billion (RM265.73 billion) in the second quarter (Q2) this year without relief.

Malaysia Airports Holdings Bhd (MAHB) handled 105.2 million passengers throughout its network of local airports in 2019, recording a 6.1 per cent growth.

The airport operator said international passenger movements grew 3.0 per cent with 53.3 million passenger movements, while the domestic passenger movements grew 9.5 per cent to 51.9 million passengers.

The Malaysian Aviation Commission (Mavcom) had also revised downward its forecast for Malaysia’s passenger traffic with a contraction of between 36.2 per cent and 38.1 per cent to 67.7 million and 69.7 million passengers this year.

This was a considerable decrease from 2019’s all-time high of 109.2 million passengers, according to Mavcom’s sixth edition of Industry Report, Waypoint, which lays out the outlook for the industry in 2020.