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Thai AirAsia to post biggest slump in profit in a decade of operation

Dec 24. 2014
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THAI AirAsia this year will record the greatest profit decline in its 10-year history, from Bt1.9 billion in 2013 to just Bt200 million, because of the political crisis.
The budget airline yesterday announced plans to focus on the domestic market in the new year to substitute for losses from international markets.
Chief executive officer Tassapon Bijleveld said most of the airlines in the Kingdom had experienced similar losses.
Thai AirAsia now expects to have carried about 12.1 million passengers this year, lower than its projection of 13.6 million. The average load factor will be 80 per cent, down from the targeted of 83 per cent. The airline last year carried 10.3 million passengers. 
“Despite increasing capacity by 20 per cent by adding five new aircraft, the number of passengers will be up by only about 16 per cent, lower than our average annual growth of 20 per cent,” Tassapon said.
Tourism authorities now expect only 24.6 million international visitors this year, down from between 25 million and 25.5 million expected previously, mainly because of internal political unrest and economic slowdowns outside Thailand.
“Political unrest in Thailand was the key factor for the decline,” he said.
Decreasing jet-fuel prices will be reflected in the airline’s financial performance in the second quarter next year. Moreover, the China market is expected to bounce back.
Several governments, including China’s, Hong Kong’s and Singapore’s, have lifted the travel warnings they issued after the military coup in May. But Tassapon said the airline wanted to see martial law cancelled as well, as it makes foreign tourists wary about coming to this country.
In the meantime as international markets remain in a slump, Thai AirAsia plans to focus on the domestic market. The airline is now opening bookings for three new routes from Bangkok to Nan province in the North and to Loei and Roi Et provinces in the Northeast. All will operate twice daily, and the introductory promotion fare is Bt333 per trip.
Thai AirAsia is also studying the addition of new routes serving Chumphon, Buri Ram, Ranong, and Mae Sot in Tak province.
Next year, five new Airbus A320 planes are scheduled to arrive. The first two will come in the first quarter and the rest in the second half.
For 2015, the airline has set a target at 14 million passengers. Its main customer bases will continue to be Thai and Chinese travellers. It also plans to add more fly-through services via Don Mueang International Airport.
Thai AirAsia is also set to add more routes based outside Bangkok, such as Chiang Mai-Hong Kong, Chiang Mai-Surat Thani and Krabi-Guangzhou, as all these routes lack competitors.
At Don Mueang, Thai AirAsia has a 30-per-cent market share in terms of passenger numbers, followed by Nok Air with 27 per cent, Thai Airways and THAI Smile with 21 per cent and other players with 17 per cent. A major renovation of part of Don Mueang is scheduled to be complete next quarter. Once the airport is fully opened, passenger capacity should rise from the current 16 million to about 30 million.
Several other airlines such as Orient Thai, Thai Lion Air, Thai AirAsia X, and V Air, as well as charter airlines, are operating at Don Mueang. In 2015, Nok Scoot will join them.

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