Local carriers brace for a challenging new year

Local carriers brace for a challenging new year

Thai Lion Air, Nok Air and Thai AirAsia jets at Don Mueang airport. (Photo by Seksan Rojjanametakul)
Thai Lion Air, Nok Air and Thai AirAsia jets at Don Mueang airport. (Photo by Seksan Rojjanametakul)

A strong currency, higher operation costs from an excise tax and a slowdown in tourism are among the challenges confronting local airlines next year.

Santisuk Klongchaiya, chief executive of Thai AirAsia, said the airline business is hoping the volume of tourists rebounds if the government imposes effective measures to deal with the strident baht.

He said controlling costs, finding supplementary income and managing efficient routes are tasks for airlines to keep afloat amid tough times.

Next year, Thai AirAsia, the low-cost carrier owned by SET-listed Asia Aviation Plc (AAV), plans to add more routes to popular destinations in Southeast Asia such as Vietnam, the Philippines and Indonesia.

It will operate with 62 jets, including the 230-seat Airbus A321neo, a more energy-efficient aircraft to replace the 180-seat Airbus A320, which will be phased out from the fleet in the near future.

The use of the bigger capacity Airbus A321neo will help with limited slot times at Suvarnabhumi and Don Mueang airports, Mr Santisuk said.

AAV reported total revenue in the first nine months of 31.2 billion baht, up by 3% year-on-year. The number of passengers grew by 4% to 16.7 million over the period.

Kasama Thassanasri, director of network planning and route research at Bangkok Airways Plc, called for the government to develop new tourism products to enhance the competitiveness of Thai tourism.

She said more tourists from Australia and Europe, which are its target markets, are visiting Vietnam, the Philippines and Indonesia, which provide cheaper and plentiful attractions.

Thai tourism will also confront another challenge from next year's large events, namely the 2020 Summer Olympics in Tokyo and Expo 2020 Dubai, which will attract tourists, in some cases altering their travel plans to other places, said Ms Kasama.

In addition, domestic airlines have to deal with high operating costs as the excise tax on jet fuel will rise from 4.726 baht a litre.

She has asked the government to reconsider applying the tax rate to help operators.

Competition in the market will be intense next year, with price wars employed to lure as many passengers as possible, said Ms Kasama.

Considering these unfavourable conditions and a weak economy, Bangkok Airways is postponing adding new routes in 2020, focusing on route management, particularly capacity and demand during the off-peak season.

Bangkok Airways has 37 aircraft for service, with plans to source new aeroplanes to beef up its fleet.

SET-listed Bangkok Airways reported 14.7 billion baht in revenue in the first nine months, down 6.9% year-on-year, with 4.41 million passengers, a drop of 2%.

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