Airlines contend high fares are justified

Airlines contend high fares are justified

Thai AirAsia and Thai Lion Air jets sit at a terminal at Don Mueang airport.
Thai AirAsia and Thai Lion Air jets sit at a terminal at Don Mueang airport.

As consumers cry foul over expensive domestic airfares, Thai AirAsia says ceiling prices should not be slashed as airlines have carried a higher cost burden since the pandemic.

However, airlines can help by increasing flights during Songkran to reduce average fares, said Santisuk Klongchaiya, chief executive of Thai AirAsia.

He said operation costs have risen since the pandemic, including for fuel and maintenance, while the aircraft supply chain has yet to return to its 2019 state.

During the Songkran holiday, it is normal for airfares to rise based on high demand during the peak season, said Mr Santisuk. Airfares are regulated by the Civil Aviation Authority of Thailand (CAAT), with ceiling prices for each route.

He said Thai AirAsia will maintain appropriate prices, differing on each route based on seasonality and passenger demand.

To help lower average fares, the airline will increase late-night and early-morning flights as options for passengers, in response to CAAT's policy, said Mr Santisuk.

He said the government should not set a minimum price for airlines, as this rule goes against free market principles and may impact consumer benefits from airlines' promotions, such as special airfares when promoting new routes.

Thai carriers will not resume a pricing strategy or restart price wars because this did not lead to positive operational results in the past, said Mr Santisuk.

To ease passenger costs, he said the government can help by adjusting to a more appropriate jet fuel tax rate.

Tansita Akrarittipirom, director of commercial operations at Thai AirAsia, said low-fare promotions are necessary for the Thai market as most of the public does not have high levels of disposable income, but still wants to travel.

In France, which is seeking to set a minimum price on European flights, the population has a higher GDP per person than Thais, said Ms Tansita, which might make it reasonable to regulate a minimum price.

Thai AirAsia is targeting 15-20% revenue growth this year as it expands its fleet to 60 aircraft with a seat capacity of 23.3 million.

The airline plans to add three A321neo and one A320ceo jets to its fleet as it expects to operate 33 domestic routes and 58 international routes to 18 countries this year.

Sarun Benjanirat, deputy director-general of CAAT, said the agency is reviewing a new ceiling price to make it more flexible for all airlines.

Mr Sarun said a fixed price will be set for each route and should be adjusted based on the different services of each airline.

Factors such as a fluctuating fuel price might be included to set an appropriate rate, he said.

The new rules are expected to be enacted by the second or third quarter, said Mr Sarun.

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