IATA: Asia Pacific Demand Remains Robust, Malaysia Set For Sustained Growth

By Kisho Kumari Sucedaram

KUALA LUMPUR, Dec 2 (Bernama) -- Asia Pacific remains the world’s fastest-growing aviation region, with demand continuing to outpace capacity amid supply chain pressures, said the International Air Transport Association (IATA).

Its regional vice president for Asia Pacific, Sheldon Hee, said the region’s fundamentals remain robust supported by strong travel appetite, resilient cargo flows, and improving operational reliability across the airlines.

“For the first nine months of 2025, passenger traffic in Asia Pacific grew 7.7 per cent year-on-year, while capacity rose 6.1 per cent. Importantly, the region’s revenue passenger kilometres have now exceeded the 2019 levels,” he said in an exclusive interview recently. 

Hee said the sustained recovery reflects both structural demand and a competitive market landscape that continues to attract travellers despite thin margins.

Globally, the industry is forecast to earn about US$7 profit per passenger (US$1=RM4.13), while for Asia Pacific, the projection is only US$2.60 per passenger. 

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He also noted that cargo flows in Asia Pacific have remained surprisingly resilient despite global tariff changes.

“What has changed is the trade routing. Instead of Asia to the United States, we are seeing stronger flows from Asia to Europe, Europe to the US, and intra-Asia. But overall, cargo has recorded seven consecutive months of growth up to September,” he said.

Malaysia: Strong policy foundation for next phase

Turning to Malaysia, Hee said the country is well-positioned to capture further aviation growth in the coming years, supported by policy moves that strengthen connectivity and tourism.

“For Malaysia, aviation already contributes about US$14.4 billion in economic value, or 3.6 per cent of the nation’s gross domestic product (GDP). With the strengthened bilateral policies, improved visa facilitation, and momentum towards Visit Malaysia 2026, there is potential for the sector to grow further,” he noted.

Improved border facilitation, he said, would help Malaysia attract more inbound travellers, with knock-on effects across tourism, trade, and aviation-linked sectors such as maintenance, repair and overhaul (MRO).

Asked if the recurring issues with Aerotrain at Kuala Lumpur International Airport (KLIA) could be a hindrance for aviation growth in Malaysia, Hee said IATA is confident that Malaysia Airports Holdings Bhd understands the travellers' concern and adequate attention is being put into this. 

“We welcome the fact that Malaysia Airports has actually engaged with us; they are listening and have taken steps to invest. I think it is important that in some ways this is an example of practical aspects of investment that we need to ensure that customer experience continues to take priority,” he pointed out, adding that IATA would want to see continuous open consultation on this matter. 

 The Aerotrain service at KLIA is halted daily from 9 pm to 7 am for rectification works, from November 15 to December 15.

Infrastructure and regulatory balance 

Elaborating further on the region’s growth, Hee noted that growth must be matched with sufficient airport and airspace capacity.

“There are ongoing investments in airport expansions across the region. What’s important is that such investments are based on real demand and supported by open consultation between governments, airports, and airlines,” he said.

He cautioned that over-taxation or escalating airport charges could dampen demand in a region where margins are already tight.

He explained that the global forecast of about US$7 profit per passenger, compared with US$2.60 in Asia Pacific, reflects a very thin margin.

“It's a margin that makes it very difficult for airlines to absorb any kind of cost increases, whether that's in terms of aeronautical charges or airport charges and so on.

“In some countries, tourism taxes, higher aeronautical charges or other levies accumulate and become a heavier burden on passengers. Airlines often have no choice but to pass on these costs, which risks reducing demand,” he said.

A balanced regulatory approach, he said, is essential to keeping air travel affordable while supporting the broader economic multiplier effects that aviation provides.

“We would be in favour of a much more open and transparent conversation regarding the end-to-end cost for travellers and we hope that there is always an openness to respond to feedback. We see there are some risks to demand and we think it's important that governments actually consider the impact of overall pricing on aviation,” he said.

In terms of supply chain issues, Hee said IATA is also working with partners to design new data solutions that could help airlines predict patterns and match available MRO capacity more efficiently.

He noted that while the supply chain remains strained, the industry has made measurable progress over the past 18 to 24 months.

According to the association, global supply chain constraints are set to cost the aviation industry an estimated US$11 billion in 2025, posing one of the biggest operational challenges to airlines worldwide, including in the Asia-Pacific region.

“Despite the ongoing challenges, reliability rates have improved across Asia Pacific,” he said.

Outlook for 2026

While IATA will officially release its 2026 forecast on December 9, Hee said current trends show no signs of weakening for the Asia-Pacific region.

“Our earlier projections indicated strong growth for the region, and nothing in recent months suggests a slowdown. Demand remains resilient,” he added.

-- BERNAMA