Nok Air has reported that its Betong route is in the red, recording a loss of around 40 million baht during its three months of operation, making the airline hesitant about extending the service over the long run.
Nok Air chief executive Wutthiphum Jurangkool said despite the route having a load factor of more than 90%, the company cannot avoid such losses, which is a cause of discouragement.
The most critical factor is high operational costs and the airline has asked the government to help subsidise seven air and ground service fees run by the state authorities. However, the airline has only been given partial support in two categories.
The soaring price of jet fuel has lead to higher operational costs, particularly on the Betong route, which covers a long distance for a domestic flight with an average flight time of 1 hour and 45 minutes.
Nok Air is also losing profitable opportunities based on its aircraft utilisation as other routes consume less time, such as Bangkok to Phitsanulok, which takes only 45 minutes, he said.
"We have to decide whether to extend the service for this route after the promotional period with tour operators ends in July," said Mr Wutthiphum.
Since starting on April 29, most seats have been filled up with customers from tour groups who utilise the privilege from "Tour Teaw Thai", a programme that provides a 40% subsidy. However, tour companies also have plenty of other marketable destinations as well as Betong which means the future of this route remains unclear.
He said the airline is in talks with the Tourism Authority of Thailand about marketing strategy and support in the long term. If there is a sensible plan, it might be possible that the route could continue.
Nok Air will also focus on opening a new route connecting Chiang Mai and Nakhon Ratchasima which already has strong demand.
The airline would like to cap the price in order for it to be less than 2,000 baht but it would depend on negotiations with regard to an airport subsidy as this cost accounted for almost 15% of the total operational cost.
Meanwhile, Mr Wutthiphum said the chief executives of many airlines in Thailand had discussed the collection of the tourism fee from international tourists which the Tourism and Sports Ministry has instructed airlines to collect from passengers arriving on flights from other countries.
Most chief executives opposed the timeline of the project as tourism demand has not fully recovered, while it has become more costly to travel.
Airlines are considering asking the ministry to postpone the project until the situation improves.
"The share of international tourists on our domestic flights increased significantly in April following country's reopening, but it was still only half the level recorded in April 2019," Mr Wutthiphum said.
