Weak 2Q for Thai carriers amid competition, higher fuel prices

Thai Airways reports loss, but RPK was up from previous year

Intense market competition and hike in fuel prices were key factors weighing down the performance of two Thai major carriers, Thai Airways International (THAI) and Bangkok Airways, in 2Q2017.

THAI recorded an operating loss of 1.5 billion baht (US$45 million) for 2Q2017, resulting from rising jet fuel prices (+20.1 per cent) and falling passenger yield (-10.9 per cent) due to price competition.

Thai Airways reports loss, but RPK was up from previous year

However, operating loss was down 13.5 per cent from the previous year as total revenue increased 9.6 per cent to 45.2 billion baht due to an increase in passenger and excess baggage revenue, according to THAI.

In the second quarter, normally a low season, passenger traffic (RPK) grew 21.9 per cent with an increase in production traffic (ASK) of 7.1 per cent.

Cabin factor averaged at 78.5 per cent, up from 69 per cent in the previous year to hit its highest in a decade. THAI had 97 aircraft in operation, two more than at end-2016 from the delivery of the Airbus A350-900XWB.

Meanwhile, aircraft utilisation increased 4.5 per cent with nearly 5.9 million passengers carried, up 14.9 per cent from last year.

The net loss is at 5.2 billion baht after deducting one-time expenses including a loss from changes in ownership interest in Nok Air.

Meanwhile, Bangkok Airways’ total revenue in 2Q was nearly six billion baht, a drop of 1.2 per cent from the same period in the previous year, which president Puttipong Prasarttong-Osoth attributed to intense competition.

The average passenger load factor was 62.7 per cent while RPK was 4.3 baht, an 8.3 per cent decrease from 2Q2016.

However, the number of passengers of Bangkok Airways increased 4.5 per cent for 2Q2017, mainly driven by the 59.4 per cent growth in passenger traffic from China over the same period in the previous year. The airline launched direct services between Samui and Chengdu in July 2016, and has been operating daily flight services between Samui and Guangzhou since January 2017.

For 1H2017, Bangkok Airways recorded a total revenue amounting to 13.4 billion baht, which dropped 2.7 per cent. The number of passengers grew 3.5 per cent while the airline saw a weaker net profit of 44.4 million baht.

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