Non-scheduled air services only profitable in two markets

KUALA LUMPUR: Non-scheduled air service providers operating in the on-demand charter and oil and gas (O&G) markets were the only firms among non-scheduled service providers to report positive operating profit margins in 2015.
According to Waypoint, the inaugural aviation industry report published by the Malaysian Aviation Commission (Mavcom), the 20 non-scheduled services providers collectively reported RM1.6 billion in revenues and RM158.9 million in operating profits in 2015.
The report revealed that the bulk of profits for this market came from on-demand charter and O&G businesses, indicating stiff competition in the non-scheduled services sub-sector.
"The non-scheduled services market is fragmented due to the different types of businesses. The size of this market is also significantly smaller compared with the scheduled services market," it said.
Besides the on-demand charter and O&G businesses, other markets that the firms operate in are surveying, observation and patrol; on-demand cargo; pleasure flying and aerial work which includes cloud seeding and mapping.
As at June 30, 2017, Mavcom has awarded a total of 231 air traffic rights (ATRs) to all Malaysian carriers since its establishment. Of the total 231 ATRs awarded, the bulk (100 ATRs) was for Malindo Air.
AirAsia was awarded 63 ATRs, AirAsia X 31 ATRs, Malaysia Airlines 34 ATRs and Raya Airways, a cargo carrier, was awarded three ATRs.
According to the report of this, 10 ATRs were revoked for failure to operate within six months from the date of issuance, while eight were revoked for partial utilisation.
Of the 10 that failed to operate, seven were from AirAsia X and three from Malindo Air. Of the eight that were revoked for partial utilisation, five were from AirAsia X and three from Malindo Air.
The Waypoint report also highlighted the contribution of the aviation industry to the economy between 2010 and 2015, which stood at an annual average of RM5.1 billion. In 2014, the industry employed nearly 44,000 full-time employees across various services.
In terms of connectivity, Malaysia's airports connected passengers via direct and indirect flights to 116 international destinations in 2016, which is the third highest in Asean after Singapore (153) and Bangkok (151).
In terms of total fleet size, Malaysian carriers increased from 177 aircraft in 2010 to 278 aircraft in 2016. Overall, Malaysian carriers are expected to add 17 aircraft this year, comprising 53 wide body, 174 narrow body and 68 others.