Airlines still struggle thanks to competition

Airlines still struggle thanks to competition

Though more flights have been planned for the Songkran holiday next month, air traffic in Thailand remains unpredictable as airlines still face losses amid intense competition, according to Nok Air.

Average ticket prices have returned to the same level as the period before the second wave of the pandemic hit in December, but airlines continue to post losses as the rate of passengers per flight remains weak compared with the volume recorded in 2019, said Nok Air chief executive Wutthiphum Jurangkool.

At present, the average price per domestic flight is 1,300 to 1,400 baht, while the average cabin factor for Nok Air increased to 70%. However, the volume of passengers stands at just 50% of the rate recorded in 2019.

He said some airlines that never market themselves as low-cost carriers slashed their prices to the same level as budget airlines, which has intensified the extreme competition in Thailand's aviation market.

Moreover, there are only 1% of travellers booking air tickets three months in advance as average lead time was reduced to 7-10 days, making for more unpredictable market forecasts.

Nok Air is operating with 22 aircraft, with utilisation not at maximum capacity. If the market improves next month, the airline plans to add more hours of service per day to each aircraft, said Mr Wutthiphum.

"Some routes outperformed others in terms of load factor, such as Bangkok to Chiang Mai, but for most flights, Nok Air and other airlines cannot make a profit," he said.

With these uncertainties and a lack of clarity on the country's border reopening policy, Nok Air decided to delay the submission of its rehabilitation plan to the Central Bankruptcy Court from March 15 to April 15.

The court allowed the airline to postpone the submission of the plan one more time, and Mr Wutthiphum said everything should be ready by next month.

He said the biggest shareholder in Nok Air -- the Jurangkool family -- has still not decided whether to buy a 13.28% stake in Nok Air belonging to Thai Airways International Plc (THAI). THAI announced it would cut its ties with Nok Air to deal with its own liquidity crisis.

However, if there were any new shareholders who were not from the Jurangkool family, this would not affect the airline as the rehabilitation committee has full authority to draft and run the rehabilitation plan, said Mr Wutthiphum.

Nok Air has sufficient cash flow to operate in the short term. If the rehab plan is approved by the court, which may require it to have a cash injection, the airline already has a plan to borrow from other firms the family owns, such as Aira Capital Plc, he said.

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