Thai AirAsia (TAA), Thailand’s largest low-cost carrier, expects to lose some 300,000 Chinese passengers during the first quarter as flights to China make up 30% of its total revenue.
While fleet expansion last year was already slow, the new coronavirus led TAA to reshuffle its operation plan this year with the same number of aircraft.
The drop in demand from Chinese travellers stems from an order by the Chinese government to ban all outbound group tours from the country, which make up 35% of Chinese passengers on TAA, some 240,000-250,000 people.
Another 80,000 Chinese tourists coming from chartered flights may be cancelled during first quarter.
“We expect a 3% drop in revenue this year because of the ban,” said Santisuk Klongchaiya, chief executive of Thai AirAsia.
“We have seen the impact spread to independent travellers as this segment may cancel flights as well.”
Mr Santisuk believes the number of Chinese tourists travelling to Thailand will rebound, and the lost revenue will be made up eventually when the situation is resolved.
An effective tourism stimulus plan, focused on the Chinese market, must be implemented to maintain tourism momentum, he said.
TAA suspended flights to Wuhan, which included two daily flights from Don Mueang airport and a daily flight from Phuket, until Feb 29.
However, other flights to mainland China operate as usual with load factors of 80-90% during the high season.
“Our strategy is to reduce costs and increase ancillary income,” Mr Santisuk said. “We are also implementing more efficient route management, resulting in the possibility of slashing the frequencies of Danang and Phuket, which have less demand.”
This year, TAA plans to operate with the same fleet size of 62 jets. The airline’s two new Airbus A321neo aircraft are ready to be deployed for domestic flights such as Chiang Mai, Chiang Rai and Hat Yai.
Three more Airbus A321neos will replace the older version this year.
Mr Santisuk said initially, the new planes with more seats will reduce the pain of having limited time slots at popular airports.
The airline has shifted to serve new routes that can contribute more passengers and compensate for the lack of Chinese guests.
Cities on its wish list are Fukuoka, Okinawa and Hiroshima, which have strong demand from both Thai and Japanese tourists.