The Thai Finance Ministry has secured approval from the country's Cabinet to reduce taxes on jet fuel for domestic flights for local airlines, The Bangkok Post newspaper said. The tax cut will remain in force until the end of September, as the nation's carriers attempt to sustain operations in the wake of falling traffic resulting from the Coronavirus outbreak in China.
"The tax reduction is to help the aviation industry and boost demand for domestic travel," said a ministry source. The tax will fall from THB4.726 baht (USD0.15) per litre to THB0.20 (USD0.01) per litre for the next seven months.
The Thai Excise Department increased the jet fuel excise tax from THB0.20 (USD0.01) per litre, which had been the rate for 24 years, to THB4.726 baht (USD0.15) per litre in 2017.
Commenting on the tax cut, Thai Lion Air Chief Executive Officer Aswin Yangkirativorn said that fuel accounts for 40% of total operating costs at the airline, but the recent measure could clip that to 30%.
A THB500 million baht (USD16 million) marketing campaign has also gained Cabinet approval to help offset slumping tourism numbers linked to the spread of Coronavirus.
According to the ch-aviation capacities module, the current weekly seat capacity on domestic routes in Thailand is close to 900,000. The largest carrier in the domestic market is Thai AirAsia (FD, Bangkok Don Mueang), which commands 30% of weekly seats, ahead of Nok Air (DD, Bangkok Don Mueang) (18%) and Thai Lion Air (SL, Bangkok Don Mueang) (17%).
