Asia Aviation Plc, the owner of Thailand’s largest low-cost airline, anticipates record earnings from its core operations this year due to a surge in international visitors driving up seat demand and airfares.
Thai AirAsia, Asia Aviation’s fully-owned budget airline subsidiary, plans to increase flights to China and India, capitalizing on a boom in travel from these key markets, according to Chief Executive Officer Santisuk Klongchaiya in a July 4 interview in Bangkok. “China and India will be the major drivers for our earnings growth,” Klongchaiya noted, highlighting that more Thais are traveling to these countries. He added, “Strong demand should continue to be a tailwind for our earnings for the remainder of this year.”
In the first half of the year, Thailand welcomed 17.5 million foreign tourists, a 35% increase from the previous year, with Chinese visitors comprising nearly 20% of the total. Prime Minister Srettha Thavisin has prioritized tourism as a central strategy to revive growth in Southeast Asia’s second-largest economy. The government is considering ending a 52-year-old ban on afternoon alcohol sales, legalizing casinos, and expanding airport capacity to support this initiative.
Despite posting a net loss of 409 million baht in the March quarter due to foreign exchange losses of 2.05 billion baht on aircraft leasing, Asia Aviation reported a core profit of 1.64 billion baht for the same period, a significant improvement from a 203 million baht loss a year earlier. The company’s core profit last peaked at 3.4 billion baht in 2016, according to its investor relations department. The stock has risen slightly over 3% this year.
Competitors such as Thai Airways International and Bangkok Airways are also increasing their seat capacity to accommodate the rise in international visitors. While Thai AirAsia plans to expand its fleet to 60 planes by adding four new aircraft, Klongchaiya acknowledged the challenges. “We have difficulties in expanding our flight capacity as pent-up travel demand worldwide has put a strain on aircraft production and services,” he said. Nevertheless, he expects that strong demand and limited seat capacity will keep regional airfares high compared to pre-pandemic levels.
Bloomberg Intelligence noted in a June 26 report that the airline’s fleet expansion and the sustained revival of demand from China will be critical to its growth in 2024.
The announcement was made in the presence of various officials, including executives from Asia Aviation and industry stakeholders, underscoring the airline’s strategic plans to leverage the robust travel demand from China and India to fuel its growth trajectory.
