TAA refuels surcharge
Published: 4/05/2011 at 12:00 AM
Thai AirAsia (TAA) yesterday reimposed the fuel surcharge on international flights that it dropped in November 2008, to offset escalating jet fuel prices.
However, chief executive Tassapon Bijleveld said the no-frills airline would not apply the surcharge to domestic services, or else ticket sales in the current low travel season could be hurt, especially considering the stiff competition.
''Jet fuel recently hit US$140 a barrel, but even at $120 the surcharge would have been necessary,'' said Mr Tassapon, adding that TAA may lift the surcharge if jet fuel drops back to below that level.
But asked if TAA would continue to raise the surcharge if jet fuel keeps soaring, he said: ''We'll just have to play it by ear and take into account the principle of economic elasticity.''
In economics, elasticity is the ratio of the percent change in one variable to the percent change in another.
Mr Tassapon described the reimposed fuel surcharge _ at 100 baht per sector for flights of less than two hours, 200 baht for 2-3 hours and 300 baht for more than three hours _ as minimal compared with other airlines.
''Others have already imposed fuel surcharges of 500-600 baht,'' he said.
Parent AirAsia based in Malaysia has imposed fuel surcharges on all flights, both domestic and international.
Mr Tassapon said TAA and its sister airlines would ensure their fares remain low despite what it calls ''the smallest fuel surcharge in the world''.
The airline will not transfer the full cost of the fuel price hike to passengers, but rather counter it by aggressively growing revenue through ancillary products and services including premium seats, in-flight meal and beverage sales, and travel insurance.
Rising fuel prices are the main contributing factor to TAA's operating costs soaring by 30-35%, he said.
Credit: Bangkok Post (www.bangkokpost.com)
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