Carriers wary despite drop in fuel price

Carriers wary despite drop in fuel price

A Thai VietJet and Thai Airways planes are seen on the tarmac at Suvarnabhumi airport on Oct 18, 2021. (Photo: Wichan Charoenkiatpakul)
A Thai VietJet and Thai Airways planes are seen on the tarmac at Suvarnabhumi airport on Oct 18, 2021. (Photo: Wichan Charoenkiatpakul)

Despite a downward trend in fuel prices, airlines remain cautious about energy costs and still have to maintain low fare promotions to sustain travel demand.

Tassapon Bijleveld, acting chief executive of Thai AirAsia X, said the situation regarding fuel prices has seen a gradual improvement which benefitted operational costs.

However, the current price is still considered to be high compared to last year which means airlines still have to carefully plan routes which can guarantee profits and tighten operational costs.

He said Thai AirAsia X would increase frequencies for flights with precise demand, such as Bangkok-Seoul, which saw the average load factor hit over 90% and was almost fully booked on some flights among its four flights per week.

"We aim to increase flights for this route to a daily service within the fourth quarter this year. This plan might seem to suggest a better aviation outlook, but it is still lagging behind the three daily flights we offered on this route before Covid-19," said Mr Tassapon.

Pinyot Pibulsonggram, head of commercial at Thai Vietjet, said the lower fuel prices have enabled the airline to manage operational costs in a more efficient manner as this cost is normally the largest share of overall operations.

He said passengers directly benefit from decreasing fuel prices as airlines can now offer lower airfares to stimulate demand and increase allotments for promotional seats on each flight, particularly on domestic routes.

However, the airline still wants the government to maintain the aid measures on fuel prices in the long run to improve the tourism situation as airfares remain a sensitive issue for domestic tourists.

The government in June approved an extension of excise tax reductions for jet fuel until the end of this year to mitigate the impact on airlines that operate domestic routes.

Mr Pinyot said amid concerns about inflation and the prospect of rising interest rates, international travel within the region remains positive, particularly on its Bangkok-Singapore service. The average load factor on this route reached over 90%.

A recent relaxation in Vietnam also resulted in higher demand as the airline was able to increase the frequency from two flights per week to five flights per day from Bangkok to Ho Chi Minh City.

However, the Bangkok-Fukuoka route still had low bookings due to travel restrictions in Japan, which means international travellers are more concerned about travel rules than economic stagnancy.

"We hope to see a more promising outlook in the final quarter as the average load factor for every route might reach 90%," said Mr Pinyot.



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