One of Thailand’s most popular low budget airlines, Thai AirAsia, is facing the prospect of staff cuts, downsizing, and selling some of its fleet to keep afloat if tourism activities do not resume in Thailand over the coming weeks.
In the face of such consequences, the Chief of Thai AirAsia has disclosed that the airline has been in discussion with other budget airlines to consider a merger once flights resume in Thailand.
The prospect of a merger would allow Thai AirAsia, and any other carrier involved, to cease price wars and eliminate competition for low-budget travel within Thailand.
There are currently seven low-cost airlines operating in Thailand, providing stiff competition to each other and keeping domestic flight prices low. However, Tassapon Bijleveld, Executive Chairman of Asia Aviation Plc, said three low-cost airlines is enough for competitive prices.
Mr. Bijleved said that Thai AirAsia is currently losing approximately 1.2 billion baht per month with 60 aircraft stranded at airports around the country.
In particular, the closure of Phuket International Airport has hit Thai AirAsia hard with 40 percent of its revenue coming from flights passing through the island airport.
In regards to a possible merger, Mr. Bijleved said it could help low-cost airlines recoup some of their losses by rising ticket prices by between 15 and 20 percent. He said:
“A merger is possible if aviation in Thailand resumes with the same old fiery price wars, as now we have more limited revenue sources.”
He expects Thai AirAsia to survive 2020 using this plan in addition to a 5-billion baht soft loan that is expected to arrive soon.
This year so far, Thai AirAsia reported a 19 percent year-on-year loss in the first quarter and a net loss of 671 million baht.
Source: Bangkok Post