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Airlines To Clarify Reasons For High Fares

08 Sep, 2023

Thai airlines are preparing to clarify the situation in response to accusations of expensive tickets, noting that the aviation industry is poised to face another surge in jet fuel prices due to soaring crude oil prices.

The Airlines Association of Thailand (AAT) will hold a seminar next week to elaborate on the airfare structure and price regulations under the control of the Civil Aviation Authority of Thailand (CAAT), after consumers cried foul over expensive airfares post-pandemic.

Wutthiphum Jurangkool, chief executive of Nok Air, said the significant increase was seen only during long holidays, when the prices were raised based on growing demand.

The price of last-minute bookings usually surge higher than average.

However, he said average prices were not excessively raised in order to make more profit as airlines still had to adjust their prices to cope with surging operating costs, mainly attributed to the cost of jet fuel.

He said the fuel price has been on an upward trend over recent weeks as it surged to US$119 per barrel yesterday, higher than the yearly average of $98.5 per barrel that the International Air Transport Association (IATA) estimated for 2023.

Mr Wutthiphum said amid reduced demand in the low season, it would be difficult for airlines to absorb this cost as they have to avoid incurring losses on each flight.

"Airlines cannot get a strong load factor except during long holidays. With no holiday in September, domestic demand significantly dropped, with the average load factor lower than 80% for Nok Air, while the average price for domestic routes was lower than 1,000 baht per flight," said Mr Wutthiphum.

He said the ceiling price for domestic routes regulated by the CAAT is too static as it cannot be adjusted to fluctuating operating costs and passenger demand.

Prime Minister Srettha Thavisin, right, met with leaders of eight airlines on Aug 28 and vowed to upgrade tourist entry services. Wichan Charoenkiatpakul

Nuntaporn Komonsittivate, head of commercial operations at Thai Lion Air, said the average load factor for its domestic flights dropped to 75%. It is expected to return to 85% in the high season.

She said the airline is monitoring demand from the Chinese market which is expected to help fill up available seats in October as passengers from the mainland have made advanced bookings for the National Day long holiday, with the load factor of its 10 routes to China reaching 70%.

Despite negative perceptions of Thailand among netizens in China, Thai Lion Air is preparing to resume all 17 routes it operated prior to the pandemic as there is still demand from this market.

She said the market would pick up faster if the government can implement a visa free policy as it pledged to the AAT last month.

Mr Wutthiphum added that air traffic from China dropped in September, but the volume is forecast to surge in the first week of October during the long holiday, with the average load factor of Chinese routes expected at over 90%.

He said Nok Air will fly to eight more cities in China and reintroduce new direct routes from Phuket and Chiang Mai to China, which were cancelled during the pandemic.

IATA yesterday reported an increase of 105.8% for Asia-Pacific airlines in July traffic compared to the corresponding period last year, while load factor increased to 84.5%.



Bangkok Post

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