The ongoing US-Iran conflict, now two months old, has triggered an oil price shock that is squeezing airlines worldwide, driving up living costs and causing widespread flight cancellations. A deepening jet fuel crisis is forcing carriers, including those in Thailand, to cut capacity in the coming months, putting pressure on both airlines and airports.
Thai airlines are facing serious financial strain, according to Sarun Benjanirat, deputy director of the Civil Aviation Authority of Thailand (CAAT). Although Thai carriers are not directly affected by Middle Eastern airspace closures, they face the same ballooning costs as those that are. Airlines typically operate on profit margins of 2 to 3%, relying heavily on the high season, spanning parts of the first and fourth quarters, to stay afloat. Jet fuel, which normally accounts for around 30% of operating expenses, has more than doubled in cost, pushing previously profitable routes into losses and forcing carriers to cut flights.
Aviation consultancy Cirium reported that Thai AirAsia ranks among the top five airlines globally for the largest flight reductions in May, planning to cut capacity by nearly 15 percentage points from previous schedules, resulting in a 10% year-on-year decline. Globally, airline capacity in May has been revised down by three percentage points, with growth now expected at just 3.4% year-on-year. The conflict could slow air traffic significantly this year, with projections ranging from a 2 to 3% decline to 1 to 3% growth.
Airports are also taking a hit. Phuket recorded a year-on-year drop in flights between April 1 and 20, leading to a 6.8% fall in passenger numbers. Airport general manager Monchai Tanode remains cautiously optimistic, however, pointing to the upcoming cool season as a potential rebound period. No airlines have surrendered their flight slots.
Thai carriers are calling on authorities to ease cost pressures by reducing or waiving fees tied to flight operations. The CAAT is in talks with relevant organisations over possible relief measures, including cuts to jet fuel excise tax and reductions in parking and navigation fees. The aim is to prevent mass cancellations and stop a further slide in travel demand.
So far, Thai airlines have stopped short of grounding aircraft, unlike some European carriers, as they want to avoid the operational burden of restarting once conditions improve. Cirium noted that older, less fuel-efficient planes are likely to see reduced utilisation, though deliveries of newer, more fuel-efficient aircraft are not expected to be delayed.
Vietjet Thailand vice-president Pinyot Pibulsonggram said the airline’s new Boeing 737 Max 8 jets are helping maintain efficient operations despite weaker passenger numbers. Nok Air is sticking to its plan to add two new jets by year’s end and intends to resume international flights in the third quarter.
Passengers affected by cancellations or delays should follow CAAT guidelines. Airlines must provide care and compensation based on how long a delay lasts, and must offer refunds or alternatives such as credit shells or travel vouchers for cancelled flights. Airlines are not required to compensate passengers if they are informed of a cancellation and an alternative routing at least three days before a domestic flight or seven days before an international one. If passengers are notified within shorter timeframes, airlines must offer alternative flights departing no more than three hours from the original schedule, reported Bangkok Post.
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