Budget airlines to raise domestic fares by 150 baht

Surprise govt hike in jet fuel tax leads to immediate 150 baht airfare hike, making low cost airlines less competitive with buses.

AIR TRAVEL

Budget airlines to raise domestic fares by 150 baht

1/02/2017
Boonsong Kositchotethana

Airlines have made a concerted decision to raise airfares by 150 baht per domestic air ticket to reflect a sudden decision by the government to raise the excise tax on jet fuel by a whopping 1,900%

At least four operators, all low-cost carriers (LCCs), confirmed the increase: Thai AirAsia, Nok Air, Thai Lion Air and Thai Vietjet Air.

In other big Asian countries, such as the Philippines, the airfares of low-cost airlines are often as low as and compete with the price of bus tickets and land transport. 

There have been signs that this was happening in Thailand also (the price of VIP buses and cheap air tickets are sometimes very close, for example) but the sudden tax increase and subsequent airfare increase may prevent this from happening in Thailand.

The sudden unexpected huge jet fuel tax increase, made without industry or public participation or consultation, is projected to contribute 4 billion baht to government revenue this year which is presumably the reason the hike was made.

This is according to Somchai Poolsavasdi, director-general of the Excise Department.

FULL-SERVICE CARRIERS NOT SURE ABOUT PRICE HIKE YET  

Full-service carriers, including Thai Airways International (THAI), its wholly owned subsidiary THAI Smile and boutique airline Bangkok Airways, have yet to make a decision on the extent and time frame of higher fares, according to executives.

Bangkok Airways appeared to be agreeable with the same increase as LCCs but THAI and THAI Smile were still considering the exact amount of the increase.

Industry sources said the three full-service carriers are likely to proceed along the same lines.

"It won't be long before they also impose hikes, given that they are also bearing higher costs," one source said.

CHANGES EFFECTIVE TODAY OR AT LEAST THIS WEEK

Thai AirAsia led the move by announcing yesterday it will charge 150 baht per person on each domestic flight, effective today (that is yesterday).

Nok Air, Thai Lion Air and Thai Vietjet Air are to impose a similar amount on all their domestic routes starting on Feb 6.

AIRFARE HIKES REFLECT ACTUAL COST INCREASE

Both Thai AirAsia and Nok Air insist the ticket increase reflects the actual cost increase resulting from the rise in excise tax from 20 satang per litre to 4 baht effective Jan 25.

Thai AirAsia described the increase as a necessary addition, to which the Civil Aviation Authority of Thailand (CAAT), the regulator, did not object.

AIR TRAVEL NOT LIKELY TO BECOME AS CHEAP AS BUSES

A senior executive of Thai Lion Air told the Bangkok Post yesterday that the higher airfares resulting from excise tax hike would complicate LCCs' attempt to make air travel cheap.

"Higher fares will discourage people from flying and turn to ground transport modes," the executive said, calling the tax hike "an effective way to clip our wings".

The hike is expected to curb LCC growth.

http://www.bangkokpost.com/news/general/1190433/budget-airlines-to-raise-domestic-fares-by-150-baht

สามารถฝึกอ่านออกเสียงและดูคำแปลได้ที่ : http://www.bangkokpost.com/learning/learning-from-news/1190844/budget-airlines-to-raise-domestic-fares-by-150-baht