The ongoing conflict in the Middle East has significantly increased operating costs for Thai Airways International (THAI), as jet fuel prices have more than doubled. In response, the national carrier has raised average ticket prices by 10–15% in an effort to remain financially viable.
Chai Eamsiri, THAI’s chief executive, said jet fuel prices have surged from approximately US$80 per barrel prior to the conflict to US$220, with the potential to climb further to US$240 under a worst-case scenario if the war continues through the end of May.
“The rise reflects real costs, not opportunism,” he said. “We only aim to cover fuel expenses to ensure survival. Without raising fares, the organisation cannot continue.”
Despite hedging around 50% of its fuel consumption through June, Mr Chai warned that increasing hedging at current price levels would be risky.
He noted that prices have already reset higher, leaving the airline exposed to potential losses should fuel costs decline in the future.
The spike in operating costs is also beginning to weigh on travel demand. Advance bookings for the upcoming Songkran holiday next month have softened compared to last year, particularly among long-haul passengers travelling to Europe and Australia.
While there have been no widespread cancellations, many travellers are delaying booking decisions as they wait for greater clarity on the situation, he said.
To manage the impact, the airline has adopted dynamic pricing strategies, including limiting the availability of low-fare tickets and raising average fares in line with market conditions.
THAI is also preparing to seek approval from the Civil Aviation Authority of Thailand to implement higher fuel surcharges. If approved, the airline may lower base fares to offset the increase, keeping overall price adjustments within the 10–15% range.
Mr Chai said the airline is developing contingency plans in the event the crisis persists. Non-essential investments, including certain equipment procurement and replacement projects, may be postponed to preserve cash flow.
“Anything that can be reduced, delayed or cancelled will be acted on immediately,” he said.
However, the airline’s core strategic initiatives will proceed as planned. These include the launch of new routes to Amsterdam and destinations in China, as well as scheduled aircraft deliveries. Investment in its maintenance, repair and overhaul (MRO) centre will also continue.
Mr Chai expressed hope that the crisis would not escalate to the level of the Covid-19 pandemic, pointing to geopolitical factors such as the upcoming United States midterm elections in November as potential catalysts for de-escalation.
Regarding potential government support, Mr Chai stressed the importance of self-reliance. “In a crisis, the most important thing is to help ourselves,” he said.
