PM agrees to bail out 7 airlines
B24bn govt splurge on budget carriers
published : 29 Aug 2020 at 04:00
newspaper section: News
writer: Chatrudee Theparat
The government has promised to inject 24 billion baht in soft loans to help bail out seven domestic low-cost airlines, while demanding in return that the airlines retain their 20,000 staff throughout the Covid-19 crisis.
Executives from the seven airlines yesterday submitted a petition to Prime Minister Prayut Chan-o-cha seeking the bailout from the government. They also requested an extension in excise tax reductions for jet fuel -- from 4.762 baht to 0.2 baht -- for one more year.
The Finance Ministry had previously waived excise taxes on jet fuel and reduced the excise tax reduction to 0.2 baht, but the cut expires at the end of next month.
Other costs waived or reduced include surcharges for aviation, passenger fees, parking fees and international departure fees.
Government spokesman Anucha Burapachaisri said Gen Prayut told the airline executives that the government will soon look for solutions to assist their companies, recognising that aviation, which plays a significant role in the Thai economy, has been drastically affected by the coronavirus pandemic.
"The Centre for Covid-19 Situation Administration plans to relax various measures for aviation and domestic tourism," Gen Prayut said at the meeting yesterday.
Gen Prayut asked for cooperation from airlines to curb price competition and encouraged them to focus on competing to offer better services and improving financial management to settle debts. He asked operators to keep their staff employed while the government seeks solutions.
The seven airlines whose representatives were present at the meeting were Thai AirAsia and Thai AirAsia X, Bangkok Airways, Nok Airlines, Thai Smile Airways, Thai Lion Air and Thai Vietjet Air.
Tassapon Bijleveld, executive chairman of Asia Aviation Plc (AAV), the largest shareholder in Thai AirAsia, confirmed that airline operators had proposed that the government assist them in three areas and Gen Prayut had agreed to provide 24 billion baht in soft loans to the firms.
"Gen Prayut has authorised the finance permanent secretary Prasong Poontaneat to talk to state banks to provide soft loans while aviation companies have already dealt with the Export Import Bank of Thailand. Airline operators expect to access the soft loans this October."
He said operators had not specified the interest rates for the loans but asked the government for the lowest rate possible.
According to Mr Tassapon, the aviation operators asked the Finance Ministry to extend the excise tax reduction on jet fuel only for domestic flights.
"The third measure related to waivers and reductions of surcharges and aviation fees, he said. The private sector asked the government to extend these until December. Gen Prayut agreed to extend them for a year to March 2022.
"We can smile now because Gen Prayut agreed to assist airlines affected by the pandemic to rehabilitate their businesses until next year when the industry should recover. The airlines will be able to maintain 20,000 jobs while Thai AirAsia alone will be able to keep 8,000 jobs secure," Mr Tassapon said.
Mr Prasong said the request for an extension of excise tax cut may be impossible because oil prices had fallen by over 70%. Operators' costs had fallen because of the oil price plunge.
In a separate development, Deputy Transport Minister Thaworn Senneam said the report of the fact-finding committee scrutinising the business administration of Thai Airways International (THAI) would be submitted to the Finance Ministry, as THAI's major shareholder, on Monday.
The committee is led by Pol Lt Gen Charnthep Sesaves, a former Metropolitan Police Bureau commissioner.
Mr Thaworn said THAI's decision to purchase 10 Airbus A340 wide-bodied aircraft between 2003-2004, which resulted in huge losses to the carrier of over 68 billion baht, as well as bribery, had caused the airline to fail.
The report will also go to the National Anti-Corruption Commission, he said.
- excise tax
- soft loans