Thailand is set to gain two new low-cost carriers in 2020, further fueling growth in the region and providing a boost to the Thai tourism industry. The two new carriers are Thai Summer Airways and Thai Eastar Jet. Both airlines are moving into the final set-up stages before taking off.
As reported in the Bangkok Post on Tuesday, 24 December 2019, both Thai Summer Airways and Thai Eastar Jet have gained air operating licenses and are now in the process of gaining their air operator certificates.
Two new low-cost carriers to start flying in Asia in 2020
Thai Eastar Jet is a joint venture between Thai and South Korean investors. Simple Flying readers may be familiar with South Korea’s Eastar Jet. Thai Eastar will begin by operating charter services between Bangkok and the Taiwanese city of Kaohsiung but it plans to build a core business operating between Thailand and South Korea.
Thai Summer Airways, on the other hand, is a joint venture between Thai and Chinese investors and plans to focus on routes between Thailand and China using Boeing 737-800 aircraft. Information on its website is sketchy. In fact, when you click on their routes and destinations pages, you get a blank white page. Still, the website says Thai Summer Airways wants to provide passengers with “a punctual, simple and secure travel experience” – not a bad thing when so many airline experiences are neither punctual nor simple.
The changing face of the Thai tourism industry
Both new airlines are jumping onboard a trend in Thai tourism. Whilst tourist numbers are rising in Thailand (up by approximately 3.5% in 2019), western tourist numbers are in decline while Asian tourists are on the rise. This is not just a short term blip, it is a trend Thai tourism authorities have been monitoring since 2014. In 2019, 64% of all tourists in Thailand came from just five Asian countries – China, Malaysia, South Korea, Laos, and Malaysia.
It is an interesting mix and a potentially volatile one for operators in the industry. Across Asia, incomes are rising and more people are flying more frequently. We all know the oft-quoted “Asia Pacific is the fastest-growing aviation market in the world” line. But the average income in places like Thailand remains relatively low compared to western countries and most local travelers are highly price sensitive. Also, the composition of the tourist market is changing.
It puts low-cost carriers like Thai Summer Airways and That Eastar Jet in the box seat when it comes to putting bums on their seats and extracting revenue from passenger’s wallets. But this part of Asia is a tough aviation market to operate in and both new airlines will have their work cut out for them.
Thai Airways struggling to survive
It is an operating environment local legacy carrier Thai Airways is struggling to adapt to. The airline is rushing to review its operations and plug ongoing financial losses as it faces possible closure. In October, Thai Airways President said the airline was facing a crisis and that very little had been done to avert it.
He cited a variety of factors as contributing to the airline’s woes – a high Thai baht was deterring travelers, the airline was flying on unsustainable routes, and operating costs were too high.
But the legacy carrier’s passenger numbers from its traditional markets were in decline. Further, Thai Airways was facing ferocious local competition from aggressive low-cost carriers. The Thai Airways’ President can add Thai Eastar Jet and Thai Summer Airways to the mix in 2020. It’s like a perfect storm.
Moving into the next decade, it’s in markets like Thailand where we’ll see the biggest impact when top-heavy legacy carriers like Thai Airways collide against lean and nimble low-cost carriers. The results are going to be interesting, but also sad if it means the end of previously fine airlines like Thai Airways.