Low cost carrier Thai AirAsia ponders merger

The CEO of Thai AirAsia says it may merge with another low-cost carrier to avoid cutthroat pricing wars once flights resume after the Covid-19 crisis subsides, and has admitted to conversations with other airlines. He says if tourism doesn’t resume by July, TAA will be forced to begin laying off employees, downsizing the company and its fleet to keep its business alive.

Thailand has 7 low-cost carriers which has forced a vicious price-war in the past five years providing cheap flights for people using the carriers in Thailand.

But local low cost carriers have suffered disproportionately over the past few months as the Covid-19 pandemic virtually shut down air travel in Asia and in many countries around the world. The Thai government’s restrictions on international and even domestic air travel have caused TAA serious losses. Some 40% of its revenue previously came from flights passing through Phuket’s airport.

The Thai franchise of Air Asia is losing about 1.2 billion baht per month due to the lockdown. Its 60 aircraft fleet is left stranded at airports according to Tassapon Bijleveld, executive chairman of SET-listed Asia Aviation.

Tassapon, a major shareholder with 40.52% of Asia Aviation, the owner of TAA, told the Bangkok Post he’s already had conversations with other airlines about the possibility of a merger. He couldn’t disclose any details but says there isn’t a concrete plan, and other conditions must be fulfilled to enable a decision.

“A merger is possible if aviation in Thailand resumes with the same old fiery price wars. Furthermore now we have more limited revenue sources.”

Though domestic air services have taken off since May, passenger loads have not been good, as only those required to travel are doing so, and there is virtually no leisure travel.

SOURCE: Chiang Rai Times | Bangkok Post