As the government put off indefinitely its foreign tourism levy, this week, one of the country’s most successful conglomerates, Minor International (MINT) announced the addition of 60 new hotels and 10,000 rooms to its portfolio. This is positive news as a mild recovery is underway in foreign tourism with a key focus now on the improvement of flight connectivity amid fears that it may be as late as 2026 before the industry sees a return to normality with top executives in Thailand hoping that this will happen two years earlier by the end of 2024.
British Airways has announced that it is not renewing its London to Bangkok service later this year nor is there any guarantee the UK airline will resume the service in March 2023 as it focuses its resources on the more profitable London to Singapore route. This announcement during the week comes with reports that Thai Airways which has increased its daily passenger rate by over 600% since the beginning of the year is planning to operate a charter flight service with UK travel agents to cater for an inherent demand in the United Kingdom with people interested in holidaying in Thailand. The news comes as airport officials and tourist chiefs in the kingdom held urgent meetings this week to see if flight connectivity to the kingdom can be improved with fears that it will be 2026 before the country’s vital foreign tourism sector returns to normal.
There are already clear signs that the Thai economy is benefiting from a mild foreign tourism recovery this year with one of the country’s leading companies, Minor International (MINT), a conglomerate that runs restaurants and hotels and whose business performance is very much linked to the foreign tourism industry, announcing this week that it is expanding its chain of hotels with the addition of another 60 sites and 10,000 rooms.
The news comes as concerns are growing about the lack of flight connectivity between Bangkok and the kingdom’s long-haul foreign tourism markets with an announcement, on Monday, by Airports of Thailand (AOT) President Nitinai Sirismatthakarn that the current number of flight connections to Thailand is only running at 33% of pre-pandemic levels.
Current international airline seat capacity for tourists into Thailand estimated at 30.9% of 2019 levels
This followed a meeting last week between the Tourism Authority of Thailand (TAT) and the Civil Aviation Authority of Thailand (CAAT) to discuss the situation where that figure was confirmed at 30.9% of the seat capacity on international flights arriving in Thailand up to April 2020 when the country, overnight, closed its doors due to the emergency.
Fears the tourism fee could hamper tourism revival plans as airlines struggle to meet demand worldwide
The current situation is that any new flight connections that have come about as a result of the country’s reopening and more liberalised entry regime have only seen a return of flights lost in 2021 when the kingdom’s foreign tourism industry saw a near 99% wipe out.
Before the emergency, Thailand enjoyed an incoming seat capacity of 56.2 million per annum before this fell to 14.8 million in 2020 later falling to 4.9 million in 2021.
Meeting between Tourism Authority of Thailand (TAT) execs and Airports of Thailand (AOT)’s boss
The meeting between the two bodies heard that a variety of factors have contributed to a slower than anticipated resumption of connectivity to Thailand due to problems within the airline industry worldwide exacerbated in particular by the Russian Ukraine war but also a shortage of skilled staff as the industry attempts to ramp up flight schedules while suffering setbacks due to a lack of staff and strike actions caused by increased pay demands driven by elevated inflation levels in all countries.
This week, British Airways announced that it would not now resume its daily flights from London to Bangkok which had been anticipated towards the end of this year and which would have boosted tourist traffic from the United Kingdom which is currently a key market for Thailand.
Even March 2023 in doubt for resumption of British Airways direct flight from London to Bangkok
Indeed, the current situation may be even more doubtful than that, with no guarantee that the British airline will restart its service in March 2023 either as it has announced that its priority will be increasing flight capacity instead between London and Singapore.
This raises another key issue which will become a factor for Thailand’s foreign tourism industry business and that is that airlines across the world, after suffering 2 years of cataclysm and problems with heightened fuel costs and staffing problems, are increasingly looking to prioritise flights where Premium and luxury seats can be sold to business and wealthier customers.
This market does not include London to Bangkok which is seen as a service for holidaymakers and budget travellers who make up the vast majority of Thailand’s foreign tourists.
Connectivity of Thailand to the world’s airline network a critical factor for foreign tourism success
At the height of the boom in tourism, up to 2019, it was noted that the expansion of the air flight network with cheaper tickets for long-haul flights and the success of the Thai government in increasing the connectivity between Bangkok and the country’s international airports, was a key factor in the kingdom’s success.
Now it looks like reworking this connection network is becoming a critical factor in efforts to revive the country’s foreign tourism business which is realistically targeting 10 million foreign tourists this year, an outcome which together with better than expected domestic demand in the second quarter’s GDP data and resilient exports may see Thailand exceeding its growth projections of 3% to 3.5% this year in terms of GDP growth from last year when the economy only grew by 1.6%.
Thailand Tourism Fee (TTF) deferred indefinitely as Thailand seeks to attract more airlines to fly in
The aborted attempt to use airlines to collect the country’s Thailand Tourism Fee (TTF) this year as well as a lack of confidence in the airline industry caused by the unpredictability of government policy is also a contributing factor.
This point was raised in March by the country manager of Emirates, Mr Tariq Al Mutawa whose airline flew no less than 32% of all arrivals into Thailand in 2021.
Emirates flew 1.8 million people into Thailand in 2019 and in 2021, it accounted for 32% of all arrivals
Tourist levy hits further turbulence with fears it could harm airline’s efforts to boost flight numbers
This week also, it was announced by the Ministry of Tourism and Sports that the Thailand Tourism Fee (TTF) has been deferred indefinitely as the country struggles to attract more airline connections.
Bad news from British Airways but Thai Airways may come to the rescue for UK travellers at the end of 2022 with chartered flights through local agents
In the short term, however, the statement from British Airways this week in respect of the London Bangkok route was more negative than positive and we may not see a resumption of the service even in March 2023.
‘We regularly keep our extensive global network under review, and we’ve taken the decision to extend the suspension of our Bangkok service. We’re in contact with affected customers to apologise, advise them of their consumer rights and offer them alternative options, including a refund or rebooking,’ the statement from the leading airline read.
Thai Airways ฿25 billion funding request from state coffers rebuffed by a senior Finance Ministry official
In the meantime, UK travellers to Thailand are using the British Airways service to Doha and on to Bangkok via Qatar Airways while Thailand’s flag carrier, Thai Airways, currently working out its business recovery plan approved by the bankruptcy court, is reported to be poised to launch charter flights from London to Bangkok at the end of the year in conjunction with local travel agents later this year in the United Kingdom to facilitate the intense demand among Thailand’s core foreign tourism market for flights directly to the kingdom.
Daily passenger numbers on flag carrier, Thai Airways, soar by over 600% since the start of the year
The current pickup in visitor numbers to Thailand, albeit nothing like the volume of three years ago with low flight connectivity to Bangkok, has seen Thai Airways manage to increase its passenger level to 13,000 a day from 2,000 at the beginning of this year.
The recovering carrier has focused on flights from Europe and Scandinavia with flights from Londons’ Heathrow Airport and two Scandinavian airports.
On Monday, Mr Nitinai, the Airports of Thailand (AOT) boss, predicted that Thailand’s airports will see pre-pandemic numbers again by the end of 2024, a prediction which seems optimistic compared to a recent World Bank presentation suggesting that foreign tourism to Thailand will not reach pre-pandemic levels until 2026, which if true, will see a significant change in the balance of the kingdom’s economy.
By the Airports of Thailand (AOT)’s projections, the kingdom will recover 77% of pre-pandemic passenger levels by 2023 with 142 million passengers projected for 2024.
This year, Thailand’s airports will handle 45 million passengers.