Airlines in Thailand are expected to keep domestic airfares stable during the upcoming Songkran holiday period, despite rising fuel costs and weaker long-haul travel demand.
The Civil Aviation Authority of Thailand (CAAT) said it has not detected any unusual increases in ticket prices ahead of the peak travel season.
Deputy director Sarun Benjanirat said the regulator recently held discussions with local airlines to ensure adequate flight availability during the holiday period. Domestic capacity is expected to increase by around 5% year-on-year.
He said the additional capacity should help keep fares at reasonable levels, particularly as several airlines have recently expanded their fleets with newly delivered aircraft.
Meanwhile, the Airlines Association of Thailand (AAT) said Thai carriers are introducing special promotions for next month’s holiday period, offering discounts of up to 30% on selected domestic routes.
Mr Sarun said the CAAT continues to monitor ticket prices closely and has so far not observed any unusually high domestic fares, even amid the ongoing Middle East conflict and rising energy costs.
Data from the Tourism Authority of Thailand (TAT) show that long-haul visitor arrivals declined significantly between March 1 and 9. The number of tourists from the Middle East fell by 76.5%, while arrivals from Africa dropped by 15%, Europe by 14.3%, and the Americas by 7.37%.
Despite the decline in long-haul demand, Thai Airways has already announced plans to increase international airfares by 10–15% to offset higher fuel costs.
Mr Sarun explained that fuel surcharges apply only to international routes and are calculated based on fuel prices, similar to the fuel tariff used in electricity pricing.
Each airline sets its own surcharge policy in order to remain competitive, he added, while noting that the CAAT will maintain the current airfare ceiling for domestic flights for the time being.
The regulator is also monitoring ticket prices on international routes operated by global airlines after identifying irregular fare levels, including business-class tickets on Sydney to London routes reaching as high as 900,000 baht.
The AAT, which represents six airlines in Thailand, met last week to discuss industry concerns. Members proposed that the government temporarily reduce the excise tax on jet fuel to ease cost pressures caused by volatile energy prices linked to the Middle East crisis.
Jet fuel typically accounts for around 30% of an airline’s operating expenses.
According to the latest report from the International Air Transport Association (IATA), fluctuations in fuel prices have a significant impact on airline profitability.
Between 2011 and 2014, when jet fuel averaged US$124 per barrel — the highest level in recent years — global airlines recorded profit margins of about 3%. This was lower than the 6–7% margins achieved between 2015 and 2019, when fuel prices were relatively cheaper.
IATA said airlines were able to maintain profitability during high-fuel-cost periods through strategies such as fare adjustments, capacity optimisation, efficiency improvements and procurement management.
However, the association warned that sudden spikes in fuel prices tend to be more damaging than sustained high prices. Airlines face the greatest difficulty when costs rise rapidly and carriers do not have enough time to adjust their strategies.
For example, in 2008, when jet fuel prices surged by 40% year-on-year to US$127 per barrel, airline operating margins fell from 4% to zero as carriers struggled to pass on higher costs quickly enough.
