The ongoing conflict in the Middle East has significantly increased operating costs for Thai Airways International (THAI), with jet fuel prices more than doubling. This surge has compelled the national carrier to raise average ticket prices by 10–15% in order to remain financially sustainable.
Chai Eamsiri, chief executive of THAI, revealed that jet fuel prices have climbed from approximately US$80 per barrel prior to the conflict to around US$220, with the potential to reach US$240 under a worst-case scenario if the situation persists through the end of May.
“The increase reflects actual cost pressures, not opportunistic pricing,” he said. “Our objective is simply to cover fuel expenses and ensure the airline’s survival. Without fare adjustments, operations would not be sustainable.”
Although THAI has hedged about 50% of its fuel consumption through June, Mr Chai noted that expanding hedging at current elevated price levels could pose risks, particularly if fuel prices decline later, potentially resulting in losses.
Rising costs are also beginning to weigh on demand. Advance bookings for the upcoming Songkran holiday have softened compared to last year, especially among long-haul travellers to Europe and Australia. While there have been no widespread cancellations, many passengers are delaying travel decisions amid ongoing uncertainty.
To mitigate the impact, the airline has adopted dynamic pricing strategies, reducing the availability of lower-fare tickets and adjusting average fares in line with market conditions.
THAI is also preparing to seek approval from the Civil Aviation Authority of Thailand to introduce higher fuel surcharges. If approved, the airline may adjust base fares to maintain overall increases within the 10–15% range.
In preparation for a prolonged crisis, the airline is reviewing contingency measures, including postponing non-essential investments such as certain equipment purchases and replacement projects to preserve cash flow. “Any expenses that can be reduced, delayed or cancelled will be addressed immediately,” Mr Chai said.
Despite these cost-control efforts, THAI’s core strategic initiatives remain on track. The airline plans to proceed with new routes to Amsterdam and China, as well as scheduled aircraft deliveries. Investment in its maintenance, repair and overhaul (MRO) centre will also continue.
Mr Chai expressed hope that the current crisis will not escalate to the level of the Covid-19 pandemic, noting that geopolitical factors — including the upcoming United States midterm elections — could contribute to de-escalation.
Regarding government support, he emphasised the importance of self-reliance. “In times of crisis, the priority is to rely on our own capabilities,” he said.