The government should help reduce travel costs for tourists, which have been rising since the coronavirus pandemic, in addition to its visa-free scheme for the Chinese, according to Thai AirAsia.
Santisuk Klongchaiya, chief executive of Thai AirAsia, said a subsidy scheme or measures to help absorb costs for tourists are necessary as both international and domestic travel demand in the past year has resumed faster than the supply side, especially airlines' capacity.
For instance, Thai AirAsia previously served China routes with 148 flights per week, but now only flies 104 flights per week. Average airfare in the first quarter surged by 100-200% from the same period in 2019, with the average load factor exceeding 80%.
Airfares for Chinese routes decreased during the low season as the average load factor dropped to 60-70%, based on seasonality and slow purchasing power, said the airline.
Local travel demand has been growing consistently since the Covid-19 pandemic with an average load factor of more than 90% for domestic flights, which pushed up the average airfare of local airlines.
Mr Santisuk said the government's visa-free policy, which started on Sept 25, is expected to increase the number of Chinese arrivals, though it may take until November to see an uptick as many travellers prefer to wait for feedback from other visa-free visitors to Thailand in September and October before making a decision.
The Chinese market is also challenged by slow economic growth, making it difficult to stimulate demand, he said.
"Travel demand was robust in the past year after the lifting of all pandemic controls, but with stagnant economic growth, we're concerned that pent-up demand will not be sustained over the long run, especially when travel costs keep surging," said Mr Santisuk.
As rising fuel costs and a weak baht continue to pressure airlines' operational costs, he said airlines will not be able to lower airfares in the near future unless they can streamline other expenses at airports, such as navigation fees and the excise tax on jet fuel.
Mr Santisuk said the government should consider lowering fees for aviation-related services at airports, which could indirectly help airlines reduce costs and airfares for passengers.