8-9-2023 (BANGKOK) Thai airlines are preparing to clarify their stance amidst accusations of expensive tickets, acknowledging the looming challenges posed by surging jet fuel prices driven by skyrocketing crude oil costs.
The Airlines Association of Thailand (AAT) has scheduled a seminar for the upcoming week to provide a detailed explanation of the airfare structure and pricing regulations under the authority of the Civil Aviation Authority of Thailand (CAAT). This move comes in response to consumer complaints about steep airfares following the pandemic.
Wutthiphum Jurangkool, the CEO of Nok Air, addressed concerns by stating that significant price increases were observed primarily during long holidays when prices were adjusted based on heightened demand. He clarified that last-minute bookings often incur higher costs, but average prices have not been excessively raised for profit. Airlines have had to adjust prices to accommodate escalating operating expenses, primarily driven by jet fuel costs.
Fuel prices have been on the rise in recent weeks, reaching $119 per barrel, surpassing the International Air Transport Association’s (IATA) estimated yearly average of $98.5 per barrel for 2023.
Wutthiphum noted that during the off-peak season, when demand is reduced, airlines find it challenging to absorb these rising costs without incurring losses on each flight. He cited the absence of holidays in September, resulting in a significant drop in domestic demand and an average load factor below 80% for Nok Air. The average price for domestic routes also remained below 1,000 baht per flight during this period.
He pointed out that the CAAT’s fixed ceiling price for domestic routes lacks flexibility to adapt to fluctuating operating costs and passenger demand.
Nuntaporn Komonsittivate, Head of Commercial Operations at Thai Lion Air, reported a drop in the average load factor for domestic flights to 75%, with expectations of it returning to 85% during the high season. The airline is closely monitoring demand from the Chinese market, anticipating an increase in bookings for the National Day long holiday in October. The load factor for its 10 routes to China has reached 70%.
Despite negative sentiments towards Thailand among Chinese netizens, Thai Lion Air is planning to reinstate all 17 routes it operated before the pandemic, as there is still demand from this market. Komonsittivate suggested that the market could recover more swiftly if the government implements the promised visa-free policy, as discussed with the AAT last month.
Wutthiphum added that air traffic from China dipped in September but is expected to surge during the first week of October, coinciding with the long holiday. The average load factor for Chinese routes is projected to exceed 90%. Nok Air will expand its reach by flying to eight more Chinese cities and reintroducing new direct routes from Phuket and Chiang Mai to China, routes that were canceled during the pandemic.
IATA recently reported a 105.8% increase in July traffic for Asia-Pacific airlines compared to the same period last year, with the load factor rising to 84.5%.
