Transport Aviation Industry Faces Turbulence Amid Sluggish International Arrivals

[snoop1130]

File photo for reference only

 

The aviation industry is confronting dim prospects as international visitor numbers are expected to remain subdued until the third quarter of the year. Analysts point to a significant slowdown in Chinese arrivals as a primary factor, exacerbated by operational hurdles linked to sweeping US tariffs impacting airlines' revenue and expenses amid decelerating travel demand in Asia.

 

Boonyakorn Amornsank from Maybank Securities notes that airlines operating on China-Thailand routes have been cutting capacity due to dwindling demand. Asia Aviation (AAV), holding a dominant 40% market share domestically, is most impacted, facing intensified domestic competition as it reroutes capacity away from China. This shift forces AAV to potentially lower airfares to sustain its load factor, echoing a trend seen in the industry where capacity rotation leads to sharp declines in average fares.

 

The Thai aviation sector has been under strain since a high-profile kidnapping incident involving a Chinese actor, which adversely affected perceptions of safety and significantly reduced Chinese tourism. Compounding this setback, a major earthquake on March 28 caused a contraction of 43-48% in arrivals from China between February and April.

 

According to Maybank, available seat kilometres (a measure of seat supply) began to outstrip demand (revenue passenger km) from March, signalling an excess in seat supply growth over demand for the first time in a year. Despite weak international traffic, domestic passenger numbers remained robust, benefiting from lower fares and a low-base effect.

 

Thailand’s tourism industry is also facing competitive pressures from North Asian countries. Since the viral story of the kidnapping in late January, Chinese tourist arrivals in Thailand plummeted by almost half year-on-year, while countries like Japan, Vietnam, and South Korea reported surges in Chinese visitors. South Korea is preparing to enhance its appeal to Chinese tourists by potentially waiving visa requirements for tour groups in the third quarter, aiming for visa-free entry by 2026.

 

Similarly, Japan may relax visa requirements for Chinese visitors, targeting an ambitious goal of attracting 60 million foreign tourists by 2030.

 

According to Krungsri Securities (KSS), foreign arrivals in Thailand are projected to remain stagnant at 35-36 million this year compared to 2024 levels. Consequently, profit growth for airline stocks is anticipated to slow to 7% this year, down from a substantial increase of 141% in 2024, amid weaker tourism growth and rising competition in the airline sector. The current environment suggests that flight growth is surpassing passenger volume growth, introducing higher competitive pressures within the industry.

 

  Adapted by ASEAN Now from Bangkok Post 2025-05-13

 

 

[Chelseafan]

Wonder how the TAT can spin this ?

[Ricardo]

On 5/14/2025 at 12:54 PM, Chelseafan said:

Wonder how the TAT can spin this ?

Thai tourist-industry helps reduce carbon-emissions ?   

[greeneking]

On 5/14/2025 at 12:54 PM, Chelseafan said:

Wonder how the TAT can spin this ?

If they are honest, they won't. Now is low season and then it will be high season again.

Can they admit it and not ask for extra funding?

[blaze master]

Sounds like it's time to jack prices on tickets.