With international arrivals banned since March and all flying suspended until the end of the month, Thailand is one of the most affected aviation markets in the current crisis. Now, eight airlines have got together to ask for support from the Finance Ministry. The group has requested a bailout of 25 billion baht ($770m) to support operations and to see them through the current travel downturn.
Hopes of a bailout for Thai airlines
As reported in Reuters last week, Thailand’s airlines are seeking loans to the value of 25 billion baht ($770m) to support operations through the current crisis. Flying has all but halted in Thailand as a result of the coronavirus crisis, and estimates are that the nation could lose as much as 1.3 trillion baht ($40bn).
Thailand is Southeast Asia’s second-largest economy but relies heavily on tourism for its GDP. With no tourists arriving in the country, businesses of all shapes and sizes are feeling the pinch, not least the airlines that usually bring the almost 40 million visitors a year to the country. In March, just 819,000 visitors arrived in the nation, a drop of 76% from the previous March, and April is expected to be worse.
As such, eight major airlines based in Thailand are seeing a bailout of $770m, which is being classed as a ‘soft loan.’ This means there will be interest applied, at a low rate of 2%, and the airlines will have five years from the start of 2021 to pay it back.
The eight airlines in question are Bangkok Airways, Thai AirAsia, Thai AirAsia X, Thai Lion Air, Thai VietJet, Thai Smile, NokScoot and Nok Airlines. Thai Airways was not one of the airlines included in this call for help, but is separately seeking $2.2bn in state aid to keep it afloat.
Bailout size is creeping up
Back at the end of March, when the full scale of the impact of coronavirus was still not clearly known, seven Thai airlines called for a bailout from the Finance Ministry. The Bangkok Post reported that Thai AirAsia, Thai Lion Air, Nok Air, Bangkok Airways, THAI Smile, Thai VietJet Air and Thai AirAsia X were working on a proposal for a bailout of 16bn baht ($493m).
Back then, IATA estimated the impact of the pandemic to reduce passenger traffic in Asia-Pacific by 37% over the course of 2020. This translated to a revenue loss of $88bn but was based on the travel restrictions being lifted after three months.
The fact that the bailout amount has increased by more than 50% shows just how much greater the scale of the impact has become. Thailand has banned passenger flights until the end of this month and hasn’t been allowing foreigners to enter for some weeks already. According to the IBTimes, the Finance Ministry has hinted at approving the loan request, but official confirmation has yet to be revealed.
Light at the end of the tunnel
Although it’s been a tough few months for Thailand’s airlines, there is hope of a recovery beginning to emerge. Airlines are starting flights from May 1st, albeit domestic only, and are working to implement measures to keep their passengers safe.
Thai AirAsia, Thai Lion Air and Nok Air have confirmed that flights will restart on the 1st. Only 70% of the capacity of the aircraft will be up for sale, and passengers will be required to wear their own masks at all times. Crew will be issued with masks, gloves and face shields, and will not be serving food or drink onboard the flights.
Thai Airways and Thai Smile plan to resume domestic flying from the June 1st, while Bangkok Airways will begin flying to Koh Samui from May 15th.