Airlines seek state aid amid rising costs

Airlines seek state aid amid rising costs

Travellers queue to check-in with carriers at Don Mueang International Airport. (Photo: Apichit Jinakul)
Travellers queue to check-in with carriers at Don Mueang International Airport. (Photo: Apichit Jinakul)

Airlines are struggling to control airfares amid high operational costs to maintain positive momentum for the domestic market, urging the government to help lift the financial burden.

Nuntaporn Komonsittivate, head of commercial operations at Thai Lion Air (TLA), said the price of fuel is the most crucial factor as it accounts for around 35% of the airline's operational costs, rising from its usual level of 30% before the surge.

Global oil prices may have recently started to see a gradual downward trend, but the aviation industry cannot immediately reap the benefit.

The airline has to await further updates on prices which could be lower next week.

Ms Nuntaporn said the load factor for the upcoming holiday on July 13-17 has already reached over 70%, driven by popular destinations for religious events, such as Ubon Ratchathani which hosts the annual candle festival during the start of Buddhist Lent as well as Phuket and Hat Yai.

However, she said low purchasing power might not derail travel decisions because Thais typically plan trips and book cheap flights in advance to save money.

The average load factor in July is estimated at 75%, however, the tourism outlook for the whole of the third quarter might be lower than that as the period is still off-peak season.

TLA has had to adjust flight frequency to match actual demand and apply campaigns or joint promotions with the Tourism Authority of Thailand to boost the number of trips.

However, the airline cannot offer heavy discounts as seen before Covid-19 and cannot set aside a bulk of seats for promotional prices as the available seats have been significantly reduced during the pandemic.

She said the government should consider extending financial support, such as reducing aviation-related fees like airport parking and landing to help airlines shore up business.

"It is impossible for airlines to increase airfares and simply shift that burden to passengers. To maintain strong air traffic, the government has to lend us a hand to help relieve the burden," Ms Nuntaporn said.

Nok Air chief executive Wutthiphum Jurangkool said the extension of the excise tax cut for jet fuel to 20 satang per litre until the end of the year can help save 500-600 million baht in operational costs in the second half.

The airline has to closely monitor both oil prices and the exchange rate as the baht's depreciation against the US dollar will cause even higher oil prices.

However, Nok Air cannot increase airfares despite higher fuel prices due to a price war among airlines.

Teerapol Chotichanapibal, Nok Air chief commercial officer, said locals will still travel as usual, but the economic slump will impact the frequency of air travel.

Meanwhile, a spike of Covid-19 cases with BA.4 and BA.5 sub-variants might not impact travel sentiment after more people were vaccinated with booster shots.

Nok Air's load factor for the upcoming holiday stood at 80% with over 100 domestic flights per day.

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