Since the cabinet has approved the expansion of the jet fuel tax reduction, low-cost airlines are ready to lower domestic airfares.
Thai AirAsia (TAA) Chief Executive Santisuk Klongchaiya, Thailand's largest low-cost carrier, said the government's decision is good news that will help airlines save operational costs and allow them to maintain average airfare prices.
TAA will discuss the request for practical solutions with the Ministry of Transport if the government asks carriers to keep reducing airfares in exchange for an extension.
Mr. Santisuk has said that the average price of a ticket is very cheap. Depending on the destination and booking period, the rate per flight is around 900-1,000 baht.
While TAA can continue to provide domestic flights by flying 30-40 out of 63 jets in its fleet and expects better performance in the last quarter of the year, he said, the carrier still needs soft loans which have been requested by domestic airlines for months.
Airline executives met with Prime Minister Prayut Chan-o-cha and agreed to allocate 24 billion baht in soft loans to mitigate the impact of the pandemic. The request is yet to be granted.
"Because of the lack of international visitors who would normally fill this void, we still have a weak demand for weekday flights," said Mr. Santisuk.
The extension of the excise tax reduction definitely helps to lift the cost burden as jet fuel normally takes up 30 percent of total operations, Nuntaporn Komonsittivate, head of commercial operations at Thai Lion Air (TLA), said.
If the government requires airlines to help stimulate the domestic economy by reducing airfare, by assessing a price structure suitable for actual operating costs, TLA can consider the requests, said Ms. Nuntaporn.
She said that the average domestic airfare is 1,200-1,500 baht, which is slightly higher than the pre-pandemic cost of around 1,000-1,200 baht as domestic travelers have to depend on the aviation industry.
"As there was fierce competition, the average price before the pandemic was too low. The current price reflects the true cost better than the prices of last year," said Ms. Nuntaporn. For 13 domestic routes, TLA has 300 flights a week, serviced by 11 aircraft.
While the average load factor has climbed to 75 percent, she said, demand from customers fluctuates and is unpredictable.
For long holidays in November and December, the airline expects forward bookings to be stronger, but it seems like visitors are reluctant to book their trips in advance. The airline has to continue to closely monitor the market, she added.
While the market situation has improved since April, when the national lockdown severely affected airlines, additional funds will help enhance cash flow and create an operational breathing room.
In a move to help alleviate the liquidity of airline operators hard hit by the pandemic, the mobile cabinet in Phuket approved on Tuesday an extension of excise tax reductions for jet fuel for another five months.
According to Finance Minister Arkhom Termpittayapaisith, from today until April 9, 2021, the extension of the excise tax reduction for jet fuel will be effective.
As part of the urgent aid measures for domestic airline operators during the outbreak, the cabinet earlier approved a lowering of the excise tax on jet fuel to 0.2 baht per liter from 4,726 baht in February. This reduction expired in late September.
In the latest extension, the government is estimated to lose 700 million baht in revenue, according to Mr. Arkhom. He said the government hopes that the extension would help influence the reduction in ticket prices by airline operators.
Mr. Arkhom said the Ministry of Finance will consider the proposal by airline operators to ask the government to provide soft loans of 24 billion baht.
Source: Bangkok Post
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