AirAsia is one of airline to prepare more marketing campaign to maintain tickets volumes after airfares up.
AirAsia is one of airline to prepare more marketing campaign to maintain tickets volumes after airfares up.

Airlines plan promotions after new jet fuel tax drives up fares

Economy February 03, 2017 01:00

By PICHAYA CHANGSORN,
SUCHAT SRITAMA
THE NATION 

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AIRLINES are preparing more marketing campaigns and promotions to maintain ticket volumes after the implementation of a new jet-fuel tax is set to drive up air fares.



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. 

“It is expected to halt [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,” Tassapon Bijleveld, chief executive officer of Thai AirAsia, said yesterday.

He added that Thai AirAsia might double the frequency of promotions or packages to twice per week soon.

“We will monitor the situation every quarter,” he said.

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 airlines, 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. 

Govt cites fairness 

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, added he. This higher tax is not expected to affect airlines or Bangkok Aviation Fuel Services, which provides refuelling services to airlines at both Don Mueang and Suvarnabhumi airports, said MR Supadis Diskul, director and executive chairman of BAFS.

“Short or long term, we’re not affected. Airlines are also not affected since they can pass the costs through to passengers,” he said.

Supadis said air transport could remain competitive with buses despite the higher fuel surcharge.

Even if airlines have fewer passengers on each flight, it will not affect BAFS as long as they do not cut the number of flights, he said.

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 next Wednesday.“The amended fares reflect the actual cost increase resulting from the rise in excise tax on jet fuel and lubricant,” executives of airlines said.