Another boom year is expected for Thailand's tourism industry, supported by a host of factors, ranging from the country's reputation for security and stability and land link improvements, to aggressive government marketing campaigns

by NONDHANADA INTARAKOMALYASUT

For Happiness on Earth

Despite high fuel prices, the unrest in the South and the re-emergence of bird flu, 2005 is expected to be another boom year for the tourism industry with the government projecting more visitors than ever before.
The natural and cultural attractions of Thailand along with the government policy of promoting long-stay tourism will continue to maintain the country as a key tourist destination.

The Tourism Authority of Thailand (TAT) says its marketing campaign for 2005 will focus on the themes of quality, sustainability and competitiveness, using a marketing image for the country of "Happiness on Earth".
The agency projects Thailand will have 13.38 million international tourist arrivals in 2005, generating 490 billion baht for the local economy. However, if unexpected external factors take hold, the number of foreign tourists could be around 12.28 million.

Locally, the agency estimates about 76.25 million trips, generating 347 billion baht in revenue.
Increasing the value of tourism products is the key strategy that will lead to higher spending and longer tourist stays, according to TAT governor Juthamas Siriwan.

The Happiness on Earth campaign will be launched as a long-term programme until 2008 when the country has set an ambitious target to receive 20 million international tourists.

In 2003, Thailand attracted 10 million international tourists with higher growth from Indochina and the Middle East. The country was on course to register 12 million international arrivals as 2004 drew to a close.

International tourist arrivals during the first 10 months of 2004 at Don Muang International Airport were 6.59 million, up 22% from the same period last year. From Nov 1 to Nov 20, the number of international tourists at the airport was up 16% year-on-year to 540,000.

Mrs Juthamas said the agency would continue to create wider awareness about Thailand, focus more on high-spending markets and promote tourism during the rainy season.

As well, it will co-operate more with neighbouring countries to offer combined destinations and create world events to attract Mice (meetings, incentives, conventions and exhibitions) visitors.

The significant supporting factor for tourism in 2005 is the planned opening of the Suvarnabhumi International Airport, which will be instrumental in making Thailand a regional travel hub.

At the same time, the improvement of land links from Thailand to other Asean countries, China and India has strengthened the country as a tourism centre, and the current oversupply of hotel rooms by 25% is more than enough to support the high growth of international arrivals.

Sonthaya Khunpluem, the Tourism and Sports minister, said there was no other country in Asia with such a strategic location in terms of linking up with countries in all directions: north, east, south and west.
On Dec 8, the country marked a significant development with the first Asean-India car rally, showing that land tourism had started to boom, Mr Sonthaya added.

To support an ambitious plan to double the number of tourists by 2008, the Tourism and Sports Ministry has joined with the TAT and Thai Airways International to launch a marketing campaign worth 120 million baht in 2005 for the global market.

The TAT has also signed an agreement with Thai Airways International, and Cendant Travel Distribution Services Inc and 54 leading travel operators and wholesalers in 16 countries to promote Thailand as a tourism destination.

Mrs Juthamas said the move would maximise Thailand's exposure abroad through several channels of Cendant TDS which operates both online and offline travel services. Tourism-related products of Thailand would be promoted on all of Cendant's channels which now have a large membership base of two million people worldwide and over 7,000 affiliated companies.

The initial plan is to focus on six key markets: the United States, Australia, the United Kingdom, Saudi Arabia, the United Arab Emirates and South Africa.

Mrs Juthamas said the Cendant linkup was expected to bring in at least two million new tourists a year.
Meanwhile, the national carrier has announced a campaign to eliminate the low-season from April to June.
THAI president Kanok Abhiradee said the lull in 2005 was likely to start earlier, beginning in March and extend through to July due to external negative factors.

He said the programme was expected

Yet another prosperous year

THE YEAR 2005 is set to be another promising year for tourism in Thailand, supported by several factors including the relatively cheap prices for tourists, various international standard attractions and accommodations, plenty of unique cultural attractions, excellent transport connections to and from the country and the increased popularity in visiting neighbouring countries, according to Sonthaya Khunpluem, the Tourism and Sports minister.

As well, a new chapter will begin in Thailand's tourism industry in 2005, with the anticipated opening of Suvarnabhumi International Airport _ assuming there are no further delays.
The new airport will help solve the bottleneck problems in air travel that Thailand has faced in recent years. Some seventy airlines will be able to operate out of the new facility, giving more tourist access to Thailand, Mr Sonthaya said.

However, he said it should be stressed there were two major tourism targets set for 2008: the arrival of 20 million tourists and the intake of 700 billion baht in tourist revenue.
He noted that the tourism industry in Thailand had recently gone through a few major adjustments for the better.

This included structural changes that led to the establishment of the Thailand Convention and Exhibition Bureau, the Tourism Council of Thailand and an office for special tourism development which currently is centred on Koh Chang.

The roles of the three agencies reflect the government's policy to bring in higher quality tourists, develop tourist attractions and integrate its management of the industry.

All eyes on Suvarnabhumi

Will it or won't it? Guessing the opening date of Bangkok's new airport is one game airline executives would rather not play, given the challenges they face

BOONSONG KOSITCHOTETHANA

THE CLOUD of uncertainty hanging over the completion of Bangkok's new international airport, the planned 20% increase in airport service fees, continued high oil prices, fierce and unrelenting competition and meagre margins are among key concerns the aviation industry has to brace for in 2005.

Strong doubts emerged as 2004 drew to a close about whether the Suvarnabhumi airport, being built at a cost of 86 billion baht, could possibly be ready by Sept 29, 2005 as officials including Prime Minister Thaksin Shinawatra have repeatedly stated. Failure to open the airport on schedule would have the most far-reaching implications on civil air traffic at one the busiest hubs in Southeast Asia.

The availability of a new airport _ and a smooth transition from the old Don Muang airport to the new site on Bangkok's eastern outskirts _ overshadows other issues which many members of the industry foresee will become more manageable.

Scepticism abounds. The International Air Transport Association (IATA), the Geneva-based grouping of 270 international carriers, has taken the view, through its monitoring of construction progress, that a delay of 12-18 months is likely for the new airport, which is 10 times the size of Don Muang and has taken 40 years to realise.

Mr Thaksin himself, who camped out at the airport construction site, about 25 kilometres east of Bangkok in Samut Prakan's Bang Phli district, has since admitted that the construction timetable could well be "too tight" and suggested the opening might be delayed "by a few months".

Transport Minister Suriya Jungrungreangkit has seemed less worried, saying Don Muang airport could continue handling flights until the new airport was ready.

A consensus is emerging among industry executives that a revised and realistic opening schedule will be the best way to ensure that the airport, as well as supporting infrastructure such as access roads and mass transit _ on which virtually no work has been done so far _ are really ready for seamless services.

But the crux of the problem is that Don Muang, already congested and serving 25 million passengers a year and about 80 airlines, does not have any more capacity to cope with future air traffic. With the capacity to handle 45 million passengers and 3.3 million tonnes of cargo a year in its first phase, Suvarnabhumi is critical to Thailand's bid to maintain its regional aviation hub status in the face of competition from Singapore's Changi airport and Kuala Lumpur International Airport. As well, the new Bangkok airport is the key to Thailand's bid to double the number of tourists to 20 million by 2008, industry executives say.

Adding to the doubts is the government's failure to date to clearly define the roles of the two airports, which is affecting all carriers' ability to make long-term plans.

Ministers lately suggested that the entire airport operation be moved to Suvarnabhumi to pave the way for Don Muang being used for other purposes such as convention and exhibition centres. Another government camp believes Don Muang continued to be used for low-cost carriers, domestic airlines or charter services.

Even if Suvarnabhumi does not miraculously open in September, the outlook for the airline industry in Thailand for 2005 looks rather positive. Executives see continued momentum from 2004 that was spurred largely by soaring international traffic despite a negative economic environment and continued uncertainty in the price of oil, and an influx of tourism driven by international arrivals in Thailand.

For the first 10 months of the 2004, IATA reported that global traffic increased by nearly 17% from the same period in 2003. But IATA director-general Giovanni Bisignani said traffic growth and profitability do not always walk hand in hand and the industry still expected losses in excess of US$4 billion for the year.

According to the Tourism Authority of Thailand (TAT), international tourist arrivals during the first 10 months of 2004 at Don Muang International Airport zoomed 22% to 6.59 million. The kingdom was on course to achieve the target of 12 million tourist arrivals for the year.

FUEL PRICES: MORE PREDICTABLEFor the time being, many airlines believe that jet fuel prices, which jumped by 60% over the course of 2004, may not rise at such a breakneck pace in the coming year and less volatility is likely.

Some believe that since jet fuel prices peaked in 2004, they should fall slightly from the year-end level of around 18 baht per litre of JP-1.

Airlines have avoided increasing fares, though some have added modest fuel surcharges, trying to strike a delicate balance between containing higher costs without scaring off travellers.

Effective from Dec 1, Thai Airways raised its fuel surcharge to $10 per sector per person on its regional services (flight less than six hours) from $7.50 previously, and for inter-continental flights (over six hours) to $20 from $15 earlier.

Passengers seemed to understand the reasons for the fuel surcharges, as indicated by the increased load factors on several Thai carriers, especially in the current festive season.

Higher jet fuel prices have increased pressure on Thai airlines' total costs. For some operators, oil bills now account for nearly 30% of their overheads, compared to some 20% earlier.

More and more airlines including national carrier Thai Airways International have stepped up hedging jet fuel to protect themselves against any high prices and make their cost calculation more predictable.

COMPETITION: LESS HOSTILE SKIESThe dogfights over Thai skies triggered by the entry of three low cost carriers (LCCs), namely Orient Thai Airlines' One-Two-Go, Thai AirAsia and Nok Air, in 2004 have seemed to cool off to increase the national carrier's load factor during the low season from 67-69% to 73-75% and generate about 7.5 billion baht in additional revenue during the campaign's five-month run.
Private operators, however, complain that the government has failed to offer any assistance for private hoteliers suffering from the unrest in the South.

Abdulaji Awaesuemae, the president of the Tourism Business Association in Narathiwat, said several hotels were on the verge of bankruptcy while other owners were planning to sell or shut down their businesses.
In June 2004, a tourism master plan was endorsed by the cabinet. The plan, which employs a total management approach, will be in place until the end of 2008.

Its key elements include strengthening core tourism related sectors such as human resources, conservation, distribution of tourism opportunities and standardisation.

With the master plan in place, Thailand, for the first time, introduced standards for hotels, home stays and natural attractions, all of which will be used as tools for future development and to ensure tourist satisfaction.
Part of this plan will be to launch projects to develop cities with access to neighbouring countries. This includes provinces such as Trat, Ubon Ratchathani, Mukdahan, Nakhon Phanom, Nong Khai, Loei, Chiang Rai, Tak, Kanchanaburi, Prachuab Khiri Khan and Ranong where tourism prospects are bright.

An administrative system to support tourism promotion activities abroad was also formed, with the government's policy to strengthen the leadership of Thai ambassadors worldwide now operating in full force.

Industry observers think a delay of 12-18 months is likely for the new Suvarnabhumi Airport.
later in the year as the fierce contest and higher operating costs have taken a heavy toll on their balance sheets.

These LCC operators also became more rational and less aggressive in the way they expand routes and operations, particularly on the domestic front, as they were forced to suspend certain routes due to poor demand shortly after service commencement.

These points in case were Thai AirAsia's Bangkok-Nakhon Ratchasima routes and One-Two-Go's Bangkok-Udon Thani flight.

Executives of Thai AirAsia, the sister airline of Malaysia's AirAsia, conceded that the airline, which took to the Thai skies in February, would have incurred "several hundreds of million baht" to date.

One industry estimate put the daily loss of Thai AirAsia, a joint venture between telecom giant Shin Corp (51%) and AirAsia (49%), at 2-3 million baht.

Nok Air, the latest player on the Thai budget airline scene in July, is facing a similar a situation, optimistically projecting a loss of 18 million baht in the first year of operation, before making a profit of 252 million baht in the second year. One industry analyst said a break-even for Nok Air, the airline spearheaded by Thai Airways, was unlikely to take place until 2006.

Udom Tantiprasongchai, the chief executive and owner of Orient Thai Airlines, frankly admitted that One-Two-Go, the country's first budget carrier that was launched in December 2003, has been running at a loss on most of its domestic routes.

However, One-Two-Go can stay afloat on the back of revenue generated by its parent carrier which operates international scheduled services and chartered flights overseas.

The results of these budget airlines have led some potential LCC investors to rethink jumping onto the bandwagon _ a scenario seen by many airline executives early in the year.
"As most LCCs were hurt and bruised, I don't think there will be additional ones joining the fray in 2005. It (LCC) is getting saturated," said Capt Yothin Pamon-Montri, president of PB Air, the Thai privately owned airline.

In the broader spectrum, Thailand could see around five to 10 more new carriers emerging "in the not too distant future" due to the government's open-skies policy, noted Dr Prasert Prasarttong-Osoth, chief executive of Bangkok Airways, the country's oldest privately owned carrier. His view was based on the fact that the Department of Aviation has so far issued 23 licences for scheduled and charter-service companies but only nine are in active use.

Rather than expanding vigorously domestically, Thailand's three LCC operators are now looking into greener pastures _ regional destinations.

All eyes are now firmly set on routes between Thailand and China over the points with flight times of two to three hours, according to industry observers.

AIRPORT FEES AN ISSUEAirports of Thailand's plan to hike airport service fees collected from airlines by 20% continues to be a target of harsh criticism from carriers as well as posing a threat that could curtail growth.

The IATA publicly raised the issue in September when it sternly warned that the increase would discourage airlines from landing in Bangkok and jeopardise Thailand's hopes of becoming a regional aviation hub and losing its edge over regional airports, chiefly Singapore.

Some airline executives said they could cope with a higher landing fee increase if AOT would reduce or merge some of the estimated 10 to 14 extras with the landing fee.

All the competing airports in Southeast Asia provide airlines with a single inclusive fee that covers their time on the tarmac from landing to take-off.

While airlines in Bangkok pay a fee for immigration processing, either as an overtime charge or as part of the bonus scheme, none of these schemes existed at competing airports, airline executives pointed out.

The assortment of fees incurred while an aircraft is on the ground, makes it difficult to compare landing cost of a 747 at Don Muang with Changi airport. AOT argued that the landing fee charged by Don Muang, taken separately as an item, was still lower than in other countries.

As the complaints mounted, Transport Minister Suriya Jungrungreangkit, following talks with Jeff Poole, an IATA director, agreed to put off the hike, originally due to take effect on Oct 1, to Jan 1, 2005.
Some modest relief was agreed on: the increases would not apply to aircraft weighing less than 100 tonnes, such as short-haul Boeing 737s.


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