Even airlines with more solid financial backing are not immune to the soaring fuel prices and many are now looking at cutting costs or slowing down their expansion programmes.
“We will have to revise our three-year marketing plan. We will look at any possible ways, including maybe the reduction of frequencies on some routes or the switch to another type of aircraft,” said Pandit Chanapai, Thai Airways VP Sales and Marketing.
Royal Brunei recently underwent a new restructuring phase, axing flights to Bali and Sydney. In Thailand, LCC Nok Air decided to suspend beginning June its only international connection to Hanoi and to indefinitely postpone flights to Macau. One Two Go had stopped its new route to Kathmandu and will not open - as originally planned- new routes to Singapore and Malaysia.
Mergers and takeovers could be the next step if fuel prices continue to remain at record highs. The move could happen in not only in Asia’s largest markets, namely China and India, but also in Indonesia and the Philippines which have many players competing domestically. However, it is difficult to think that cross-border mergers might take place in South-east Asia, at least for the short term. The national pride element of having a flag carrier still remains high on any government’s agenda in the region.
So far, consumers have not reacted to new increases in fuel surcharge. “Since early this year, we have been running at over 75 percent load factor on our global network with routes such as Bangkok- Paris reaching even over 90 percent. We mostly lose money on extra-long flights but we cannot pass on consumers the totality of fuel price increases as it will definitely dent travel confidence,” said Chanapai.
