National carrier Thai Airways International has reported a quarterly operating profit, but warned competition was likely to intensify after a UN body last month lifted a ban on new international flights by Thai-based carriers.
Low-cost rivals Thai Vietjet, NokScoot and Thai AirAsia X have said they plan to add flights to destinations in Asia, increasing pressure on the legacy carrier, which like Singapore Airlines and Cathay Pacific Airways has reported falling ticket prices.
Thai Airways, 51% owned by the government, swung to an operating profit of 739 million baht (US$22.33 million) for the third quarter ended Sept 30, from a 836 million baht loss a year ago.
Revenue rose 6.3% to 46.9 billion baht as it boosted capacity and filled a higher percentage of seats, but reported a 7.5% decline in average fares.
The airline said competition was likely to intensify as new routes were opened and the industry faced shortages of trained pilots, flight attendants, engineers and technicians.
“The operating environment for full-service carriers in the Asia region remains highly challenging, especially on international routes, given intense price competition and strong capacity additions from both low-cost carriers and other full-service carriers,” DBS analyst Paul Yong said, adding that higher fuel prices also would be a challenge.
Thai Airways’ expenses rose 2.7% in the third quarter as jet fuel prices spiked and the government began taxing jet fuel for domestic routes.
The airline’s shares were trading 1.7% lower on Monday.
The UN International Civil Aviation Organisation lifted the red flag against Thailand over safety concerns in October, allowing Thai-based carriers to add new international routes.
Thai Airways on Monday said it planned to add frequencies on flights from its Bangkok hub to Brussels, Oslo and Auckland and to expand Southeast Asian routes flown by budget arm Thai Smile.
“Thai Airways should focus on profitable routes like Japan and premium offerings,” said Chakrit Puechpan, executive vice president of MFC Asset Management, which holds shares in the airline.
Due to impairments on older aircraft and foreign currency exchange losses, Thai Airways reported a net loss of 1.8 billion baht for the quarter, wider than the 1.6 billion baht net loss a year ago.
Other Thai airlines have also reported challenging conditions in the quarter ended Sept30 due to higher fuel prices.