Thai AirAsia seeks govt aid amid demand slump and tax cuts

Thai AirAsia, experiencing a downturn in demand during the second and third quarters of 2023, now seeks government intervention to boost the stagnant local purchasing power.

Chief Executive Santisuk Klongchaiya noted that the seasonal nature of tourism has resumed, with the average load factor for the domestic market in the second quarter decreasing to 90% from 94% year-on-year.

Despite the decline, 2023 saw strong performance, driven by pent-up demand from the pandemic, maintaining a high load factor throughout the year. The second-quarter domestic load factor was lower than the first quarter’s historic high of 96%, as travel patterns normalised, concentrating mainly during the high season.

For international routes, the average load factor was around 90% in the second quarter, up from 83% in the same period of 2023, but consistent with the first quarter of this year.

Full recovery for Thai AirAsia and the broader tourism industry hinges on the Chinese market, which is unlikely to meet the government’s target of 8 million visitors in 2024. To reach the target, Santisuk calls for a stimulus to accelerate Chinese travel demands.

“About six to seven million Chinese tourists this year is the most likely scenario. To reach 8 million, there must be (a) stimulus to accelerate demand as the Chinese government is now quite active in terms of promoting its domestic tourism.”

The airline urges the government to consider reducing the jet fuel excise tax from the current rate of 4.726 baht per litre, a move that would lower travel costs for domestic tourists.

In the second half of the year, Thai AirAsia plans to launch 4 to 6 new international routes, potentially including Hyderabad (India), Kathmandu (Nepal), and Phu Quoc (Vietnam).

For domestic routes, Santisuk announced the introduction of a new route to Lampang, with seven flights per week starting in October. This will be Thai AirAsia’s 25th domestic destination, increasing the number of weekly domestic flights to 612 from 35 routes.

By year-end, the airline aims to operate with 60 aircraft, still short of the pre-pandemic fleet of 63 but an improvement from the 53 during the pandemic.

The Deputy Governor for domestic marketing at the Tourism Authority of Thailand, Somradee Chitchong, reported that Lampang’s tourism receipts stood at 2.6 billion baht in the first six months, driven mainly by local travellers, who contributed 2.38 billion baht, reported Bangkok Post.