Excise Department eyes jet fuel tax discount to help domestic airlines

[snoop1130]

Excise Department eyes jet fuel tax discount to help domestic airlines

 

 

BANGKOK (NNT) - Many low cost domestic carriers have reported losses this year, one of the factors being the increase in jet fuel tax of 0.2 baht to 4.73 baht per liter in 2017. The losses have led to some airlines cancelling certain domestic routes. The Excise Department has held talks with airline representatives and fuel suppliers on the feasibility of reducing the jet fuel tax as a remedial measure.

 

At the meeting, the Excise Department ordered airlines to assemble information on benefits the general public would receive from a lower fuel tax, such as any reduction in airfares, service enhancements, and facilitation of tourism in smaller cities stemming from the opening of new routes.

 

Over the next two weeks, the department will be holding additional talks with the Tourism Authority of Thailand, the Ministry of Tourism and Sports, and private companies in the tourism industry on this matter.

 

The Excise Department’s Director General Patchara Anuatasilpa, said today the current jet fuel tax is not higher than the taxes imposed on other petroleum products, adding that any discount on jet fuel tax would only be offered as part of a short-term campaign.

 

Bangkok Airways’ Senior Vice President on finance and accounting Anawat Leelawatwatana, commented that the airline is willing to help promote Thailand as the region’s transportation hub, and promote tourism to local cities. He said however that added fuel costs account for 30-40 percent of the airline’s operational costs, which is rather high.

 

He said airlines would be capable of opening new routes serving more local cities should the government offer assistance in this regard.

 

-- © Copyright NNT 2019-11-21

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[legend49]

Non competitive airlines wanting money handouts from the government for poor business management. Sounds like the Thai Int model.

 

Many low cost domestic carriers have reported losses this year . As usual no evidence of who. Just talk again.

[30la]

It is easy for you to support the rich with money that is not yours, if a company cannot support itself, you must close it and not keep it alive with money that would do the population a lot of good!

[Scott Tracy]

Most countries have no duty on airline fuels, as if they did, the airlines would get it from the ones that didn't charge. Thailand charges fuel duty on all airlines, not just domestic?

I can see more airlines stopping in the Gulf to fuel up rather than fuelling in Thailand. An increase from 0.2 baht per litre to 4.73 baht per litre on an aircraft that uses 3000 litres per hour is an increase of 14,000 baht per hour.

That's another 4.5 people per 1 hour flight required just to cover the fuel duty costs. That extra weight requires more fuel, thus more duty, so probably an increase of 6 people to cover all costs.

Economics is not my forte by the way, so don't quote me.

[Scott Tracy]

Airlines operate close to bankruptcy anyway. Especially American ones. Chapter 13 and Chapter 11 are never far away. A near 2400% increase in fuel duty is a devastating blow and it will cause airlines to rethink less profitable routes at the cost to those people who need them. Imagine the devastation of his routes if diesel duty increased by such an amount. If airline prices increase because of this or airlines stop serving the destinations, people suffer, the government will suffer, everyone loses.

[Srikcir]

On 11/21/2019 at 5:40 PM, snoop1130 said:

Many low cost domestic carriers have reported losses this year, one of the factors being the increase in jet fuel tax

Of course another factor might be that domestic travel (call it tourism or whatever) is down. 

October 2019:

https://www.nationthailand.com/news/30376985

• Thailand’s six major airports have handled more than 141 million passengers over the past 12 months and though international travel rose by 4.4 per cent, passenger numbers on domestic routes showed a drop of 1.4 per cent, the Airports of Thailand (AOT) reported on [October 1].
• The data collected also showed that domestic travel had dropped almost everywhere with the exception of Suvarnabhumi and Chiang Rai airports, which recorded a 3.49 per cent and 1.33 per cent increase in domestic travellers respectively .
• Of the [budget airlines] flights 172,333 were international up by 19.03% and 257,432 domestic down by 0.76%. 

 

If all domestic carriers are charged the same jet fuel tax, then it's likely that the fuel tax is not the sole cause (if at all) for overall carrier losses.