Thai AirAsia (TAA) reported a THB416.6 million ($13.5 million) net loss for the 2019 third quarter, attributable to sluggish tourism growth in the Kingdom.

However, TAA executive chairman Tassapon Bijleveld, speaking Nov. 14 at the CAPA Asia Aviation Summit, said he is confident the airline will be profitable in the fourth quarter and the whole of fiscal 2020.

TAA’s 3Q revenue was THB9.7 billion, a year-over-year (YOY) improvement of 4%.

The exceptionally strong Thai Baht has deterred some tourism to Thailand and has indirectly affected some domestic traffic from international transfer passengers.

Although TAA carried 5.3 million passengers in 3Q, up 3% YOY, traditional strong inbound traffic from China and Europe during the winter season has weakened, and with 70% of all passenger tourists, the airline has suffered as a result.

Tassapon also said the airline was “badly burned” in fuel hedging and has incurred some losses.

He described domestic yield within Thailand as eroding dramatically over the last few years because of stiff competition, but has “probably reached the bottom” as fares have increased around 5% in recent months; a revival in yield is expected in 2020.

Competitor Thai Lion Air has also reduced 20% of its domestic capacity in favor of international routes.

To bolster its income, TAA is relying on ancillary services, which now accounts for 18% of revenue. The LCC realized that 25% of its ticket sales goes to online travel agents (OTAs) and with data analytics, saw that some OTAs do not help sell ancillary products for TAA. Tassapon said it dropped a number of large OTAs in China and signed new partnerships for smaller OTAs that agreed to help the sales of ancillaries. 

TAA’s hub at Bangkok’s Don Mueang International Airport is now operating at saturation and infrastructure limitations, Tassapon said. To overcome the lack of check-in booths, TAA is actively promoting self-check-in and bag drop facilities to ease passenger congestion, which has a take-up rate of 32% after five years of effort.

The airline’s Airbus A320s will eventually be upgauged with A321neos—which will begin to arrive in December—as the airline seeks to overcome saturated infrastructure at its Bangkok hub.

Tassapon is also optimistic of the government’s Eastern Economic Corridor plan to spur the underdeveloped east, and concurrently, the development of U-Tapao Pattaya International Airport. The government is currently garnering bidders for the airport operator. Once it reaches fruition, the airport will be a viable hub for TAA, Tassapon said.

Based on Aviation Week Fleet Data Services, TAA flies 51 A320s and 11 A320neos, and within the next five years about half of TAA’s fleet will be replaced by the A321neo.

Thai AirAsia X’s new A330neo is currently running service to Sapporo, Japan, and Tassapon said it plans to start flights to Eastern Europe in 2020.

The LCC is still open for consolidation with Nok Air; both parties have agreed to the content of the deal and Tassapon indicated he is still open for discussions in the near future.

Chen Chuanren,