Airfares may remain flat this year, based on the expected increase in seat capacity, demand for air travel and upward trend of jet fuel price, says the Malaysian Aviation Commission.

KUALA LUMPUR: The Malaysian Aviation Commission (Mavcom) has outlined three main challenges that the local aviation industry would face this year.

They were rising jet fuel prices, lower passenger traffic growth and airport terminal capacity, it told NST Business.

Should jet fuel prices continue their upward trend, Mavcom said there would be pressure on airlines’ profitability and airfares.

Jet fuel prices had increased 25.3 per cent over the last 12 months.

However, Mavcom said there might be some respite due to a stronger ringgit.

It also said a lower-than-forecast economic growth would lead to lower passenger traffic growth.

Bank Negara Malaysia has forecast growth of between five and 5.5 per cent this year, which is slightly lower than last year’s forecast.

“With an expected net increase of 4.8 per cent in the number of seats among Malaysian carriers this year, based on available data, load factors would be closely monitored.”

It said airport terminal capacity constraints could be a challenge at certain locations.

“There are airports which are operating beyond their theoretical passenger handling capacity, including Kuala Lumpur International Airport and Subang, Penang and Langkawi airports.

“Unless steps are taken to ease capacity constraints, passengers will suffer discomfort at these airports.”

Mavcom expects complaints to increase as passenger traffic rises and consumers gain deeper understanding of their rights.

“We believe Malaysian consumers are becoming more aware of their rights under the Malaysian Aviation Consumer Protection Code,” said Mavcom, adding that it was constantly educating and empowering consumers.

“To date, we have resolved 99 per cent of complaints lodged (2,560 complaints from March 2016 to October last year) and are focused on protecting consumers.”

The primary complaints were refunds, mishandled baggage and flight delays.

On airfare movements, Mavcom said the factors included the cost of providing the service, competition in the market.

“Fares to international destinations in the second quarter of last year were on average 1.9 per cent lower than the fares in the same period previously. Fares to domestic destinations also declined 7.2 per cent on average over the same period,” it added.

Mavcom said based on an expected increase in seat capacity, demand for air travel and upward trend of jet fuel prices, fares might remain flat this year.