The AirAsia incident will further dent investor confidence in Malaysia's troubled aviation sector, which has lost three commercial aircraft this year, analysts say, and affect the industry throughout the region.
"This has never happened in the hundred-year long history of commercial aviation, to have three major tragedies so close to each other with the same geographical origination," said Mohshin Aziz, an analyst with Maybank, referring to the loss of two Malaysia Airlines flights with 537 casualties earlier this year that has left the Malaysian flag carrier in financial trouble.
Last month Malaysia Airlines posted its worst quarterly loss since late 2011, as passenger numbers fell sharply. The airline's number of passengers dropped 14 per cent year-on-year during the July-September period. "It is too early and too hard to gauge a sector-wide impact, but it is definitely negative for the whole region," Aziz said.
AirAsia Indonesia, operator of the missing flight, is a local associate 49 per cent owned by AirAsia, Malaysia's second largest airline company and now the only publicly traded one as Malaysia Airlines is being delisted.
The share prices of AirAsia Berhad at Bursa Malaysia fell the most in three years by 12.93 per cent early yesterday before closing at 2.69 ringgit (HK$5.97), down 8.5 per cent. AirAsia X Berhad, the group's long-haul arm also listed in Malaysia, fell 8.03 per cent. As the largest budget carrier in Asia, AirAsia also has affiliates in Thailand, the Philippines, India and Japan.
"AirAsia as a brand is a Southeast Asian airline as its operations in different countries are inter-related," said Daniel Wong, an analyst with Hong Leong Investment Bank. "The whole region's aviation sector will be impacted. There will be weakening demand and yield will be coming down to stimulate demand," he said