Domestic travel restrictions are likely to remain in place in Malaysia into the fourth quarter, causing a major setback for Malaysia Airlines’ recovery timetable.

The latest wave of the COVID-19 pandemic in the country caused the government to impose strict curbs on domestic tourism and interstate travel in June. These are due to be phased out, but only gradually.

Malaysia Airlines is aligning its expectations with the government's projection, the carrier’s chief strategy officer Bryan Foong said during a July 14 CAPA Live event. This means the carrier should see domestic travel resuming towards the end of the fourth quarter, Foong said.

At the end of 2020, before the latest outbreak emerged, Malaysia Airlines was expecting domestic traffic to recover to pre-pandemic levels by the first half of 2021. But when that did not occur, the carrier had to come up with new estimates, Foong said. Management now predict 2021 full-year capacity will be just 15-20% of 2019 levels.

The spike in COVID-19 cases and the new restrictions meant Malaysia Airlines “had to push back our recovery plans by about a year,” Foong said. Assuming vaccination rates in Malaysia reach acceptable levels by the end of this year, then a full recovery of domestic demand could come in early 2022.

One of the carrier’s major fleet moves is phasing out its Airbus A380s. The airline is now “going out to the market to understand the options of what we can do with the A380s,” Foong said.

Malaysia Airlines issued a tender on July 12 related to the sale of its six A380s and/or their components. Expressions of interest can be sent via email by Aug. 12, followed by formal responses to the request for proposals. A contract award for their disposal is tentatively scheduled for November, according to the tender document.

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