High fuel costs have battered Thailand’s aviation industry, leaving flag carrier Thai Airways groaning under its losses while smaller operators struggle to survive.
Oil prices jumped above US$147 per barrel on July 11. They have since dropped but remain volatile.
Thai Airways International blamed fuel costs, as well as a massive foreign exchange loss, for its 9.23 billion baht (US$274.3 million) loss in the second quarter — its worst in a decade.
“The main reason was the sharp rise in the price of jet fuel by 73 percent, causing the company’s fuel costs to rise sharply,” Ngamnit Sombutpibool, the airline’s vice president of accounting, said in a statement.
The airline has repeatedly hiked its fuel surcharge — now at US$90 per passenger — but still failed to rein in costs.
Thai Airways now plans to ask 400 staffers to take voluntary retirement, while trimming back its fuel-intensive long-haul flights, canceling its direct flight to New York and making changes to its Los Angeles service.
HIT HARD
The carrier’s low-cost sister airline Nok Air has been battered even harder, suffering losses reported at around 100 million baht.
“Last year we expected oil prices of at most US$110 to US$120. But the prices rapidly jumped higher. By that time it was too late to raise ticket prices to catch up with the oil prices,” said Pinyot Pibulsonggram, the company’s vice president of marketing.
Nok Air has suspended three routes and is slashing its flight schedule from 70 to 20 a day, Pinyot said. Ticket prices are up 20 percent, staff salaries have been cut by 25 percent, and 200 workers have been fired, he said.
Pinyot insisted that Nok Air’s finances were likely to turn around this month.
“Our loss in July dropped significantly and we already saw profit showing in the first half of August,” he said.
“But our big challenges currently are to regain trust among our customers and business partners and to help customers understand our need to raise ticket prices,” he said. “We can no longer call ourselves a budget airline.”
Budget carrier One-Two-Go has already been forced to suspend its operations, saying fuel costs had forced the company to restructure its finances.
OPTIMISM
Another budget carrier, Thai Air Asia, said it was weathering the fuel shock by focusing on other sources of income — including in-flight food and drink sales, travel insurance, as well as hotel deals and other services.
“Cutting costs is just a dream, especially when global oil prices keep rising steeply. In practice it is too difficult to catch up with rising oil prices by raising air fares or fuel surcharge fees,” chief executive Tassapon Bijleveld said.
He said that because of cautious spending, the airline’s finances were still in order.
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