Thai AirAsia (FD, Bangkok Don Mueang) has initiated talks with rival low-cost carriers about a potential merger given the havoc the COVID-19 pandemic has wrought on the tourism-dependent and heavily competitive Thai market, Chairman and main shareholder Tassapon Bijleveld told The Bangkok Post.

Tassapon refused to name the parties he was in talks with about the potential merger. However, he said that in his opinion, the Thai market could only support up to three LCCs in the long-term. In pre-COVID times, the country was home to Thai AirAsia and its long-haul arm Thai AirAsia X, Nok Air with NokScoot, Thai VietJetAir, Thai Lion Air, and Thai Smile with Thai Eastar Jet undergoing certification.

"A merger is possible if aviation in Thailand resumes with the same old fiery price wars, as now we have more limited revenue sources," he said.

He underlined that while the LCC has so far endured the crisis with some salary cuts and furloughs but no outright lay-offs and aircraft retirements, its future was now "hanging in the balance". If Thailand does not reopen to international tourism by July, Thai AirAsia will have to start downsizing staff and fleet. Tassapon said that the carrier's cash burn currently stands at around THB1.2 billion bahts (USD37.7 million) per month. He also admitted that it was likely Thai AirAsia would post "unprecedented losses" in 2020, regardless of the development of the market in the second half of the year.

"If Thai AirAsia can fly from 20 to 60 jets by the second half of this year, we can survive 2020 as other cost reductions have been implemented, and we expect a better performance after the second quarter," Tassapon said.

He expects that Asian tourism will start to pick up in October, around the usual start of the peak season in Thailand. However, tourism from Europe can take as much as two years to recover, Tassapon warned.

Tassapon is the Executive Chairman of Asia Aviation Plc. (AAV), which owns a 55% stake in Thai AirAsia. He also owns a 40.52% stake in AAV. The outstanding 45% of shares in the LCC is owned by AirAsia Group.