Carriers under the cosh

Carriers under the cosh

Airline group set to press state for help

Aircraft belonging to carriers Thai Smile Airways, AirAsia and Thai Airways are seen parked on the tarmac at Suvarnabhumi airport on Monday. Wichan Charoenkiatpakul
Aircraft belonging to carriers Thai Smile Airways, AirAsia and Thai Airways are seen parked on the tarmac at Suvarnabhumi airport on Monday. Wichan Charoenkiatpakul

Thai AirAsia views the forced lockdown as jeopardising its financial status as the aviation industry has been struggling without government support for over a year as it questioned the ability of the government to collect tax when large businesses have been left to die.

Tassapon Bijleveld, executive chairman of Asia Aviation (AAV), the largest shareholder of Thai AirAsia (TAA), said liquidity is at a critical stage and it has had to seek emergency borrowing to help pay payroll this month.

The company is preparing a business restructuring that will see new investors injecting a 3.5 billion-baht loan but the process has been delayed as further discussions with related authorities are needed.

The airline was the first carrier to halt all domestic routes on July 12, following the partial lockdown announcement.

"We stopped all flights last week as there was little demand with only 30-50 passengers per flight in July," Mr Tassapon said.

"The government never responded to our demands for soft loans which have been requested since the first lockdown last year. The ban of domestic flights now has worsened the situation," he said "We hardly see a way out from this circumstance."

He said seven airlines in The Airlines Association of Thailand (AAT) will gather and call on the government this week to urgently address the impact on the aviation industry as they have suffered the most from the latest lockdown announcement.

According to AAT, seven airlines in Thailand have a total workforce of more than 15,000.

Mr Tassapon said if the government just watched large corporates like airlines collapse as has already happened with few carriers last year, it will create a negative impact on the government budget next year when large companies cannot generate tax revenue.

"The government might not be able to meet tax collection targets as many big taxpayers are losing their financial status. With a tremendous loan of 3.3 trillion-baht that the government has to repay, how can it sort out the budget if it is missing a large contribution from corporates?," he said.

Last week, the World Bank cut the projection for Thailand's GDP this year to 2.2%, in the same direction as commercial banks in the country that previously revised down the figure to about 1% after a fresh lockdown.

Mr Tassapon said if this scenario becomes true, more airlines will not survive until next year.

"Even though TAA will not have to close down its business like other airlines, it's very hard to steer past this crisis on our own," he said.

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