On February 14th, pressures imposed by the coronavirus pandemic have only worsened the outlook on Thailand’s airlines. COVID disruptions comes after more than a decade of what many analysts consider a lack of mismanagement. It would seem now more than ever, Thailand’s carriers are not financially stable or healthy.
Flag carrier, Thai Airways filed for bankruptcy protection
Thai Airways filed for bankruptcy protection in early May 2020, at the moment that the gravity of COVID-19 became clear. Holding a stake of just under 48%, the government quickly rescinded a bailout. Then, in June 2021, the central bankruptcy court in Bangkok approved a $12.9 billion restructurings plan with existing creditors, just after the airline’s record loss of $4.5 billion in November 2020.
As maintained by the US Department of Trade, as of the 30th of September 2021, Thai Airways fleet consisted of 103 active aircraft, including a range of Airbus A320-200s operated by subsidiary, Thailand Smile.
Passenger occupancy at an all-time low
Thailand faces a myriad of COVID-induced problems. The passenger occupancy on international flights to Thailand fell by 95% in September 2021 compared to traffic in 2020. Meanwhile hotels remain filled at just 9% capacity of their rooms. On December 1st, Management Consultancy, McKinsey, said:
“The Thailand travel industry can seek growth by bunding product offerings and being able to promote ecotourism and cultural tourism and investing their time in infrastructure in destinations attractive to domestic tourists among other options and opportunities.”
As Thai Airways and the travel industries have not grown at the same pace as other areas of the Thai economy, the government has given huge traffic rights such as to middle east carrier Qatar Airways, Etihad Airways and Emirates – taking traffic into and out of Europe through their respective hubs. Due to this, the three middle east carriers play a dominant role in Thailand’s aviation, rather than the country’s flag carrier.
Due to the lower passenger occupancy, operating cash flow has taken a hit. As a result it is predicted the Thailand aviation industry will be materially smaller, as fleet rationalisation continues in the short-to-medium term.
What are your thoughts on the current state of the Thai Aviation industry? Let us know in the comments below
