After bruising first half, budget carriers glum on near future

After bruising first half, budget carriers glum on near future

Low-cost carriers in Thailand suffered a tremendous setback in the first half, as passenger numbers for Thai AirAsia (TAA) and Thai Lion Air (TLA) fell more than 50%.

TAA reported that it carried 4.8 million passengers, down 58% year-on-year, mainly due to international flight bans that froze international arrivals from March 22.

The use of each jet was reduced to 8.8 hours a day on average from 12.5 hours during the same period last year, while the average airfare plunged 6% to 1,379 baht per person.

Asia Aviation Plc (AAV), the major shareholder of Thai AirAsia, announced first-half revenue of 9.67 billion baht, down 55% year-on-year, with a net loss of 1.81 billion baht.

Nuntaporn Komonsittivate, head of commercial operations at TLA, said her airline endured travel restrictions and sluggish sentiment during the lockdown period as the number of passengers fell nearly 60% to 2.3 million.

The airline is unlikely to restart international flights in the next three months, she said, citing restrictive preconditions for Thailand to reopen its borders to foreign tourists.

"We've followed developments from authorities on a daily basis and have to accept the reality that border reopening is not easy, as we need agreement from both sides," Ms Nuntaporn said.

Although Russia has reportedly approved a coronavirus vaccine, the revival stage for tourism remains far behind.

The safety and effectiveness of Russia's vaccine will need examination by the World Health Organization, Ms Nuntaporn said, and public confidence will not fully recover right away after the announcement.

She said TLA will stay alert and be ready to serve international routes as soon as the Civil Aviation Authority of Thailand lifts the ban on international flights.

Southeast Asian countries are the natural first consideration for restoring connections to Thailand, and TLA has slots available to begin operating immediately.

But while the near-term future is unpredictable, TLA will have to adjust strategy again with greater reliance on domestic routes.

TLA is banking on a stimulus plan from the government to draw tourists to provincial destinations far from home, rather than taking trips within driving distance.

"We've seen a slow response from the local market in August as school started a new semester," Ms Nuntaporn said. "But after the cabinet approved additional holidays in September, the four-day weekend will make people consider long distance journeys again."

Separately, Tris Rating yesterday downgraded TAA's company rating and the rating on TAA's senior unsecured debentures to BB from BBB-.

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