Thailand’s Budget Airlines Brace for a Challenging New Year

Budget Airlines in Thailand are bracing for a very challenging new year, with higher operation cost due to the strong baht, excise tax and a slowdown in tourism.

According to Santisuk Klongchaiya, the chief executive of Thai AirAsia, the budget airlines business is hoping the volume of tourists rebounds. Most noteworthy if the government imposes effective measures to deal with the strident baht.

Telling the Bangkok Post that controlling costs, finding supplementary income and managing efficient routes are tasks for airlines to keep afloat. Especially amid tough times for Thailand’s budget airlines.

He said next year, Thai AirAsia, plans to add more routes to popular destinations in Southeast Asia. Such as Vietnam, the Philippines and Indonesia.

It will operate with 62 jets, including the 230-seat Airbus A321neo. The aircraft are more energy-efficient and replace the 180-seat Airbus A320. Which will be consequently phased out from the fleet in the near future.

The use of the Airbus A321neo will also help with limited slot times at Suvarnabhumi and Don Mueang airports.

AirAsia reported total revenue in the first nine months of 31.2 billion baht. Up by approximately 3% year-on-year. The number of passengers also grew by 4% to 16.7 million over the period.

Government needs to develop new tourism products

Kasama Thassanasri, from Bangkok Airways has also called for the government to develop new tourism products. Above all to enhance the competitiveness of Thai tourism.

She said more tourists from Australia and Europe, are visiting Hong Kong, Vietnam, the Philippines and Indonesia. These countries are providing cheaper and plentiful attractions.

Thai tourism will also confront another challenge from next year’s large events. Namely the 2020 Summer Olympics in Tokyo and Expo 2020 Dubai. Which will distract tourists, in some cases altering their travel plans to other places, said Ms Kasama.

In addition, budget airlines have to deal with high operating costs. Especially as the excise tax on jet fuel will rise from 4.726 baht a litre.

She has asked the government to reconsider applying the tax rate to help budget airline operators.

Competition in the market will be intense next year, with price wars employed to lure as many passengers as possible, said Ms Kasama.

Considering these unfavorable conditions and a weak economy, Bangkok Airways is postponing adding new routes in 2020. Focusing on route management, particularly capacity and demand during the off-peak season.

Bangkok Airways has 37 aircraft for service, with plans to source new airplanes to beef up its fleet.

SET-listed Bangkok Airways reported 14.7 billion baht in revenue in the first nine months. Down 6.9% year-on-year, with 4.41 million passengers, a drop of 2%.