Asia Aviation sees record earnings from China, India travel surge

Asia Aviation Plc, Thailand’s largest low-cost airline operator, anticipates record earnings from core operations this year, driven by a significant increase in international visitors, which is boosting demand for seats and airfares.

According to Chief Executive Officer Santisuk Klongchaiya, Thai AirAsia, the fully-owned budget airline unit of Asia Aviation, plans to increase flights to China and India to take advantage of the surge in travel from these two top markets. Santisuk added that more Thais are also visiting these countries.

“China and India will be the major driver for our earnings growth… strong demand should continue to be a tailwind for our earnings for the remainder of this year.”

Thailand saw 17.5 million foreign tourists in the first half of the year, marking a 35% increase from the previous year, with nearly one-fifth of these visitors coming from China.

Prime Minister Srettha Thavisin prioritised tourism to stimulate growth in Southeast Asia’s second-largest economy. The government is even considering lifting a 52 year old ban on afternoon alcohol sales and legalising casinos, alongside plans to expand airport capacity.

Asia Aviation, 40.7%-owned by Malaysia’s AirAsia Aviation Ltd, recorded a net loss of 409 million baht in the March quarter due to foreign exchange losses of 2.05 billion baht on aircraft leasing, attributed to the Thai currency’s weakness.

However, the company reported a core profit of 1.64 billion baht for the same period, a significant improvement from a 203 million baht loss a year earlier.

The company’s core profit reached its highest at 3.4 billion baht in 2016, according to its investor relations department. The stock has seen a slight increase of just over 3% this year.

Rival airlines such as Thai Airways International and Bangkok Airways are also adding more seats to accommodate the rise in international visitors. Thai AirAsia aims to expand its fleet to 60 planes by adding four new aircraft.

However, Santisuk noted the challenges in expanding flight capacity due to the global surge in travel demand, which has strained aircraft production and services.

“We have difficulties in expanding our flight capacity as pent-up travel demand worldwide has put a strain on aircraft production and services.”

Despite these challenges, the strong demand and limited seat capacity are expected to keep airfares in the region at their currently high levels compared to pre-pandemic prices, reported Bangkok Post.