In 2008, the airline industry was in crisis globally. Thailand's airline industry was no exception. This stemmed from a 4.8 percent contraction in the number of air passengers in 2008, totaling 54.4 million, versus last year's growth rate at 7.8 percent, or 57.2 million in 2007. In addition, the Thai airline industry was hit by higher fuel costs. Despite the downward trend in crude oil prices seen during 2H08, many airlines incurred greater losses as a result of hedging obligations they made while oil prices had been on the rise. This problem was compounded by deteriorating economic sentiment as a result of domestic political problems that led to the seizures of both Don Muang and Suvarnabhumi airports at the end of last year. Although the two airports were forced to remain closed only temporarily, the adverse impact of that on Thailand's tourism and transportation was enormous.
Regarding the outlook for the Thai airline industry in 2009, it is expected that it will face crisis particularly from the ongoing global recession, which will affect air travel in continuation from last year. Moreover, political unrest has hurt the atmosphere for domestic tourism and investment, especially for tourism-related businesses that would accommodate those air passengers entering Thailand. At present, the transition to the Abhisit Vejjajiva government seems to show signs of improvement for Thailand's political situation. If it stabilizes and no further serious incidents occur like last year, and the new government promote foreign investor and tourist confidence toward Thailand, then we should see an improved outlook for the airline industry, somewhat.
KASIKORN RESEARCH CENTER (KResearch) expects that the number of passengers in 2009 will total around 49-52 million, contracting 5-10 percent in continuation from the 4.8 percent contraction of last year. The slowing economy is still a major negative factor.
This year's airline business competition is expected to intensify, especially with special discounts to seize market shares amid falling passenger traffic. Meanwhile, passengers have become more concerned about ticket pricing, so this might be an opportunity for low-cost airlines. The competition between airlines targeting the high-end market will get tougher because this target group still has high-purchasing power. However, KResearch views that an airline's survivability depends on not only price and service, but also other factors such as their financial status, routes, cost management, fame and recognition, etc.
KResearch expects that the government's tourism stimuli will benefit our airline industry only indirectly, as it will help promote air travel somewhat. Nonetheless, the government should seek to restore confidence and try more marketing strategy by arranging road shows together with marketing plans in target markets that still have relatively high purchasing power. They should also launch campaigns to spur tourism domestically and abroad, such as arranging domestic travel and tourism promotional events and attracting world conferences to Thailand to help the Meeting, Incentive, Convention And Exhibition (MICE) market, which typically has higher than average purchasing power. Such a marketing plan has to be based on clear objectives because there are budgetary limitations.
Also, the plan to upgrade Suvarnabhumi International Airport to become the single airport should be considered carefully for the benefit of the country and conform to the goal of our nation becoming the aviation hub for this region. If the government wants to implement such a plan, the construction of Suvarnabhumi International Airport phrase II should be carried out to expand the airport's capacity and support an increase in passenger traffic. Any such investment should be considered carefully, otherwise it might become a long-term financial burden for the government.
Enter the code from the poll