Missing plane may cool Malaysia tourism, airline bookings

Fri Mar 14, 2014 4:04am EDT
 
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By Brian Leonal and Al-Zaquan Amer Hamzah

SINGAPORE/KUALA LUMPUR (Reuters) - Loss-making Malaysian Airline System risks losing out on lucrative corporate business from travelers outside the country in the wake of the disappearance of a China-bound flight carrying 239 people, travel agents warned.

The plane's still-unexplained disappearance - six days after it took off from Kuala Lumpur - has sparked concerns over the airline's handling of the issue and that of Malaysian government officials.

It may also hit the lucrative tourism trade to Southeast Asia from China, according to a report by Bank of America-Merrill Lynch, although it said that a growing Chinese middle class and more affordable travel would underpin numbers.

China accounts for 12 percent of tourists to Malaysia, excluding those from neighbouring Singapore, the bank said.

The airline and the Malaysian government have faced demands to speed up their hunt for the plane from China, home to two-thirds of those on the aircraft.

While Malaysian travel agents said they had seen few cancellations, some others outside the country warned that corporate travelers would switch if they had a choice.

It was not clear how much of the airline's revenue comes from business travel. For Malaysia overall, business travelers accounted for just over half of travel and tourism's contribution to GDP in 2012, according to a World Travel and Tourism Council report.

"I would say 80 percent of corporate travelers would opt to change for now," said Alicia Seah, director of communications at Dynasty Travel in Singapore, adding that foreign travelers were switching to national carriers such as Singapore Airlines.   Continued...

 
A woman and a girl look at a Malaysia Airlines plane on the tarmac of Kuala Lumpur International Airport March 13, 2014. REUTERS/Damir Sagolj