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Thailand: Airfares could spike after Opec cut
Airlines are expecting higher airfares than usual during the upcoming low season as oil cartel Opec and its allies announced production cuts.
Opec plans to lower oil production by 1.16 million barrels per day, starting next month, which has led to a surge in prices.
Pinyot Pibulsonggram, head of commercial at Thai Vietjet, said the situation could affect ticket prices in the market during the next 3-6 months, with the low tourism season typically between June and September.
Airfares could potentially become more pricey than during the cool season and the upcoming Songkran holiday, as airlines downgraded ticket prices for those periods because of lower fuel surcharges, he said.
Mr Pinyot said fuel prices typically comprise a large portion of airlines’ operational costs, around 20-30%.
Airlines should evaluate their operations and seek methods to offset fluctuating fuel prices, he said.
For example, Mr Pinyot said Thai Vietjet’s strategy is to gain higher passenger volumes during the low season to maintain airfares and keep the airline competitive in the market.
The average load factor should run above 85%, exceeding the usual low season rate of 80%, he said.
Increasing flight capacity to draw more inbound foreign tourists is crucial as the strategy can help drive Thailand’s economy, said Mr Pinyot.
For the Songkran holiday, Thai Vietjet registered positive bookings from both international and domestic passengers, he said.
Thai Vietjet’s most active international routes are direct flights to Japan, which have an 80% load factor.
Domestic routes to southern Thailand, led by Phuket and Krabi, had the strongest load factor of 85%.
However, flights to Chiang Mai and destinations affected by PM2.5 air pollution received fewer guests than usual, said Mr Pinyot.
Yuthasak Supasorn, governor of the Tourism Authority of Thailand (TAT), said that prior to Opec’s announcement, fuel prices and airfares were lower as flight capacities were ramping up.
If fuel prices continue to rise, airfares might become unaffordable for tourists, said Mr Yuthasak.
He said the tourism industry needs more flight frequencies as increasing revenue from passengers could offset high fuel prices.
The TAT expects to welcome at least 25 million foreign visitors this year.
Source: https://www.bangkokpost.com/business/2544904/airfares-could-spike-after-opec-cut