Maunu von Lueders, regional vice president, Asia Pacific, IATA
BY 2016, traffic within the Asia-Pacific region will represent 33 per cent of global passengers, up from 29 per cent in 2011. This makes the region the largest regional market for air transport, ahead of North America and Europe. Passenger traffic is forecast to grow at a compound annual growth rate of 6.7 per cent over the 2012 to 2016 period.
Thailand has a part in the region’s bright future. Today, Bangkok is a major aviation hub in South-east Asia, with Suvarnabhumi Airport ranked among the top 15 airports in the world in terms of passengers handled. Bangkok was also ranked as world’s most visited city. Many of these visit Thailand (on business or for leisure) and they spend money. That makes aviation an important contributor to Thailand’s economy. If we include the catalytic benefits through tourism, aviation contributes nine per cent of Thailand’s GDP and supports about 2.2 million jobs.
Looking ahead, international passenger traffic for Thailand is expected to grow seven per cent annually between 2012 and 2016, while domestic passengers will grow by 6.5 per cent over the same period. But this expected growth in traffic is by no means guaranteed. Positive steps have been taken to expand Suvarnabhumi Airport. But two recent developments give us reason to worry.
The first is the plan by the Airports of Thailand (AOT) to increase its passenger charges. Airports need to cover their cost. But as AOT has just reported a doubling of profits, there does not seem to be a revenue issue. In accordance with International Civil Aviation Organization principles, airlines are eager to engage with AOT through IATA.
But we would like to focus the dialogue on how we can best use Bangkok to bring business to Thailand. An unjustified 100 baht (US$3) increase is a step in the wrong direction that will become a four billion baht discouragement for people to visit, move around and spend money in this amazing country.
The second is the proposed mandatory health insurance tax on tourists travelling to Thailand. We recognise that there are costs incurred by Thailand’s public hospitals as a result of the very small proportion of visitors who leave unpaid bills. But it does not make sense to penalise all visitors by imposing a health tax.
Individually, these moves will not serve the broad interest of Thailand. Together they are worse. Making travel to Thailand expensive could be toxic to this country’s vital tourism industry – studies have shown that a 10 per cent increase in travel costs can result in up to 15 per cent reduction in travel demand. It will reduce Thailand’s competitiveness as an international tourist destination.
Thailand needs a vision and coordinated policy framework to protect the competitiveness of the tourism industry—its 2.2 million jobs and the tax receipts from nine per cent of its economic activity. The question that Thailand’s policy makers need to consider is whether the benefits of the charges increase and the proposed health insurance tax outweigh the risks to the 2.2 million jobs that depend on aviation, as well as the nine per cent GDP that aviation contributes to the Thai economy. A rethink of the passenger charge increase and the proposed health insurance tax is needed.
In around two months, we will celebrate the 100th anniversary of scheduled commercial services. The airline industry was born on January 1, 1914 when Tony Jannus piloted a Benoist flying boat between St Petersburg and Tampa, Florida.
In the first century of commercial flight, Thailand has developed into a major aviation hub. But for this to happen, Thailand needed to ensure that it had policies that supported the development of aviation.
A good first step to mark the momentous occasion and lay claim to the economic benefits that aviation can provide to Thailand in its second century is to do away with the passenger charge increase and the health insurance tax.
By Maunu von Lueders, regional vice president, Asia Pacific, IATA
