Thailand’s Finance Ministry has been approached by five carriers to ease the burden of excise tax on jet fuel as they feel the pinch from sagging tourism, surging costs, and a strengthening baht, the Bangkok Post reported.
Thai AirAsia submitted the request on November 13 on behalf of itself, Bangkok Airways, Nok Air, Thai Lion Air, and Thai VietJetAir. Tassapon Bijleveld, chairman of the board of Thai AirAsia parent Asia Aviation, represented the carriers.
Jet fuel absorbs 30% to 35% of the airlines' costs, Tassapon explained, but raising fares in such a tight market was not an option. The excise tax on jet fuel has risen from THB0.2 baht (USD0.0066) per litre to THB4.726 baht (USD0.156) over the last two years.
Thai AirAsia has cut capacity by 15% since July, with frequencies to Chiang Mai, Khon Kaen, Krabi, and Phuket all down. It has increased aircraft utilisation to almost 13 hours to save costs, Tassapon said.
Bangkok-based Asia Aviation recently posted a THB417 million (USD13.8 million) net loss for the third quarter as the business buckled under pressure from highly competitive pricing and a rising baht. Thai LCCs are not currently looking into aircraft acquisitions or new routes at least for the short term, according to Tassapon.
The Thai government expressed sympathy for the carriers’ plight. Charnkrij Dejvitak, a vice minister to the Prime Minister's Office, acknowledged their request and said a public-private committee may be appointed to look into the matter. He suggested two possible solutions, temporarily reducing the excise tax for two to three years or pinning it to a currency exchange rate.
