Airlines' price cuts leave tour operators in the lurch

Airlines' price cuts leave tour operators in the lurch

Lower airline ticket prices have prompted more overseas travel.
Lower airline ticket prices have prompted more overseas travel.

The volatile currency and fierce airline competition have led to difficulties for operators managing outbound tour packages.

Many airlines, especially low-budget carriers, have cut ticket prices and launched promotions to try to increase passenger volume, especially during the low season, said Thanapol Cheewarattanaporn, president of the Thai Travel Agents Association.

"Some airlines provide flash sales, low airfare, for a certain period of time to get as many customers as possible, and it's hard for us to secure flight seats for our planned packages," Mr Thanapol said.

Those who take advantage of these ticket promotions are typically FITs (free independent travellers). Mr Thanapol expects the portion of these travellers to grow to 30% of the total 11 million Thais travelling overseas this year. The balance will be made up by tour groups.

Ranon Viputsiri, head of commercial operations at Thai Vietjet Air, said the baht's appreciation is a windfall for the airline, generating more bookings during the low season of June to September.

Thai Vietjet offered heavy promotions and cheap tickets to encourage people to travel during upcoming long holidays: Asarnha Bucha next week and Mother's Day on Aug 12.

The airline's fire-sale fares for Vietnam and Taiwan, both favoured destinations among Thais, drew Thai FITs, especially millennials, who usually travel with friends and like to save on airline tickets and hotels.

More affordable and convenient air transport has prompted soaring outbound tourism, with the number of Thais going abroad up significantly.

The Thai Tourism Council estimates that 10.8-11 million Thais will travel abroad this year, up by about 5% from last year. The growth stems from route extensions from airlines and affordable airfares.

Japan is still the top destination in Asia for Thais, followed by Vietnam, Taiwan and China.

The Japan National Tourism Organization forecasts some 1.2 million Thais to visit Japan, up 13% from 2018. In the first four months, some 512,700 Thais visited Japan, up nearly 20% year-on-year.

Airlines introduced more direct routes since mid-2018, such as Suvarnabhumi to Nagoya, Fukuoka and Sendai by Thai International Airways, Don Mueang-Fukuoka by Thai AirAsia X and Suvarnabhumi-Tokyo by All Nippon Airways.

According to Mr Thanapol, China outbound tour operators can continue to offer packages because tourists prefer full service packages instead of travelling on their own in the mainland.

Other nationals are choosing to travel as FITs, leaving tour operators struggling with reduced airfares every week. Operators have taken to not setting prices for travel packages while being underpriced.

Countries in Eastern Europe and Turkey, which set no visa requirements for Thai tourists, are growing destinations. The baht has firmed relative to the euro and especially the Turkish lira, which has suffered continuous declines.

Thais can travel to these destinations for cheaper than usual, Mr Thanapol said.

He also called for the government to intervene with the baht, as appreciation has turned visitors away from Thailand.

"The solutions to tame the baht should be implemented as fast as possible to maintain balance between inbound and outbound tourists," Mr Thanapol said.

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