KUALA LUMPUR: Malaysia Aviation Group (MAG) is bracing for heightened cost escalations across the aviation value chain as US tariffs begin to weigh on aircraft components and supply chain stability, forecasting component price hikes of between 5% and 14% in the near term.
Group chief strategy and transformation officer Bryan Foong Chee Yeong said the US trade measures, combined with global macroeconomic pressures, have introduced a “triple threat” of cost inflation, recessionary demand risks and fragile supply chains.
“We do anticipate cost pressures to come in. The implications of the US tariff regime will hit us on multiple fronts, cost hikes, recessionary fears affecting demand, and a fragile, volatile global supply chain,” he said at MAG 2024 financial year performance briefing today.
Foong noted that aircraft parts and components are expected to bear the brunt of the increase, with suppliers already signaling cost-push inflation on critical items.
“This comes at a time when MAG is undergoing active fleet renewal and expansion, making cost predictability a central concern for the group. To manage these challenges, we have instructed our teams to be more disciplined with costs. Fuel hedging, for instance, is being ramped up to 50%, from the current 25–30%, to offer more stability in our cost base,” he said.
Foong reiterated that MAG’s international network remains a key revenue engine, providing a buffer against volatility in the Malaysian ringgit and allowing the Group to extract higher yields per available seat kilometre.
“We will continue to focus on international flows, which over the past two to three years have contributed significant volume and high-margin revenue to the group,” he said.
While MAG continues to invest in customer experience through product and service upgrades, he emphasised that operational agility will be central to navigating 2025, a year the group anticipates will remain highly volatile.
Foong said 2025 will be another challenging year for aviation.
“We are accelerating our transformation and preparing for our next growth phase, but we remain very aware of global risks, including geopolitical instability, disrupted supply chains, and talent shortages,” he said, adding that cybersecurity will also be a growing concern.
Foong said talent retention and development remain another focal point for MAG, which acknowledged persistent manpower gaps across the aviation sector. “It is not just us, talent is an industry-wide challenge. But we have plans in place to strengthen our pipeline and improve retention.”
Despite these headwinds, he said, MAG is committed to its long-term network strategy and will continue to invest in capacity growth where viable.
“However, we do not rule out tactical adjustments should macroeconomic conditions worsen. We will remain dynamic in how we manage our network and fleet. Being agile in our deployment plans will help us navigate any sudden shifts in demand or cost structures,” he added.
Foong says US trade measures, combined with global macroeconomic pressures, have introduced a ‘triple threat’ of cost inflation, recessionary demand risks and fragile supply chains.
