Malaysia, regional airlines face fresh competition from Middle Eastern carriers

KUALA LUMPUR: Malaysia and other Asia Pacific aviation markets could face intensifying competition for international passengers as Middle Eastern airlines move aggressively to reclaim traffic lost to Asian carriers following disruptions to air travel earlier this year.

Association of Asia Pacific Airlines (AAPA) said Middle Eastern carriers are determined to win back passengers who switched to alternative routes through Asian hubs, although it remains uncertain whether they can recover their previous market share.

"You may get some shift, but the Middle Eastern carriers are not going to give up without a fight. They will try to win customers back and take back the business they lost during the last four months. I think they will succeed to some degree.

"The Middle Eastern carriers are trying to be aggressive and recapture the traffic. It will come back, but whether it comes back to the same level is the question," AAPA director general Wong Hong told Business Times in an interview.

Since the start of the tensions in the Middle East, several Asia Pacific airlines have seen an increase in transit traffic as some passengers have opted for alternative routes through Asian hubs.

For example, Cathay Pacific said in a statement in April that the disruptions in the Middle East had shifted passenger demand towards other aviation hubs, with more passengers transiting through Hong Kong.

The airline has added flights and increased capacity to Europe as travellers seek alternative routes.

On airfares, Hong said it is difficult to predict whether fares will rise or fall, as pricing depends on market conditions and how aggressively airlines compete for passengers.

"Airfares are determined by supply and demand. If an airline puts out a particular airfare and the bookings do not come, what do you think it is going to do? Airlines need to be realistic. It comes down to what the market can bear and customers' willingness to pay. It is very much dependent on market forces," he said.

Hong said airlines are also closely monitoring fuel prices as the industry approaches the end of the year.

He said regional airlines are hoping for a return to normal operations, with fuel prices stabilising at more manageable levels.

"I am hopeful that the aviation industry can get back on its feet and put this fuel crisis in the past, assuming there are no major surprises. If demand continues to hold up despite the inflationary risks, then I think that going into 2027 we will hopefully return to business as usual," he added.