Airlines are planning to increase marketing and promotions as a rise in jet-fuel taxes will drive up ticket prices.
Major carriers doubt that the higher tax on jet fuel will affect their business in the long term, but competition is expected to be even tougher, especially for budget airlines operating domestically.
The chief executive officer of Thai Air Asia said,“It is expected to affect ticket bookings for a short period, but the impact is not clear yet. It may take two weeks to see the real impact.But higher costs will force airlines into more competition, which will focus more on fares.”
An aviation expert at Thai Airways International said that although airlines had announced an increase in air fares due to higher costs, they had also prepared more marketing activities and campaigns to maintain ticket sales.
Another source in the travel industry said the higher excise tax for jet fuel would not have a major negative impact on airline business and air travel because many carriers, particularly low-cost companies, would launch promotions to stimulate advance bookings.
The recent Cabinet decision to raise the excise tax on jet fuel and lubricants from 20 satang to Bt4 per litre went into force on January 25, causing airlines to announce fare increases on domestic routes.
The government cited fairness as a reason for the jet-fuel tax increase, as diesel and petrol have been levied excise tax at Bt5-Bt6 a litre.
The new aviation-fuel tax rate applies only to domestic flights, while international flights will still be able to refuel tax-free. This higher tax is not expected to affect airlines or Bangkok Aviation Fuel Services (BAFS), which provides refuelling services to airlines at both Don Mueang and Suvarnabhumi airports.
Airlines should not be affected although they will pass the costs through to passengers.
Air transport could remain competitive with buses despite the higher fuel surcharge. Even if airlines have fewer passengers on each flight, it should not affect BAFS as long as they do not cut the number of flights.
Low-cost airlines including AirAsia and Nok Air announced a Bt150 extra fuel surcharge |on January 31. An extra cost |will be included in all fares of Nok Air from February 6 next Monday onwards; Thai Lion Air will also implement an increase on Monday.
Thai AirAsia said the increase went into effect on Wednesday.
Bangkok Airways announced that it was necessary to increase its domestic fares by Bt200 effective from February 8.
(Source: The Nation, Thailand)