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AirAsia calls for action to cut travel costs

AirAsia calls for action to cut travel costs

Thai AirAsia suggests that, in addition to its visa-free program for the Chinese, the government should reduce the increasing travel costs for tourists, which have risen since the pandemic.

Thai AirAsia’s chief executive officer, Santisuk Klongchaiya, stated that a subsidy program or measures to help absorb costs for tourists are necessary as international and domestic travel demand has resumed quicker than the supply side, particularly airline capacity, over the past year.

Previously, Thai AirAsia served China routes with 148 flights per week, but now operates only 104 flights per week. Comparing the first quarter of 2019 to the same period in 2018, the average airfare increased by 100-200%, with the average load factor exceeding 80%.

The average load factor for Chinese routes declined to 60-70% during the off-season due to seasonality and sluggish purchasing power, the airline reported.

Since the pandemic, local travel demand has steadily increased, resulting in an average load factor of more than 90 percent for domestic flights, which drove up the average airfare of local airlines.

Mr. Santisuk stated that the government’s visa-free policy, which began on September 25, is anticipated to increase the number of Chinese arrivals, though it may take until November to see an increase as many travelers prefer to wait for feedback from other visa-free visitors to Thailand in September and October prior to making a decision.

Slow economic development is also a challenge for the Chinese market, making it difficult to stimulate demand, he said.

“Travel demand was robust in the past year after the removal of all pandemic controls,” said Mr. Santisuk. “However, with stagnant economic growth, we are concerned that pent-up demand will not be sustained in the long run, especially as travel costs continue to rise.”

As rising fuel prices and a weak baht continue to put pressure on airlines’ operational costs, he stated that airlines will not be able to reduce airfares in the near future unless they can reduce other airport expenditures, such as navigation fees and jet fuel excise tax.

Mr. Santisuk suggested that the government consider reducing fees for aviation-related services at airports, which could indirectly assist airlines in reducing costs and tariffs for passengers.

READ MORE https://www.airasia.com/en/gb

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