Impact of COVID-19 on airline business: a case study of airlines in Thailand

Abstract

Hardship of airline industry is outstanding in 2020, air travel has been interrupted, since the new coronavirus 2019 started spreading around the world in December 2019. This research depicts the picture of impact from the consequence after economic activities are intervened both demand and supple sides, leading to financial problem. Travel restriction policy strictly imposed in several countries has reduced airline operating activities to the minimum. Airlines then mainly operate in domestic sector, and are permitted for only some specific international flights. Commercial airlines had struggled to survive, by introducing competitive airfare, finding other source of revenue, reduce over capacity, and cutting expenses. Rather than external factors of airlines such as shrinking in economic activities, government policy, and geographical factor reflected by operating performance, this study found that business management strategies take important role for survival of airlines throughout the hardship as reflected by financial performance. Rather than revenue gains from domestic travel, good asset management and financial reserve are the key outstanding reason behind the buffer of Bangkok Airways, short haul full-service carrier, which had the least impact compare to Thai Airways, long-haul full-service carrier, and Thai AirAsia, short-haul low-cost carrier. The lines between each airline category, defined by type of air travel services, become blurry as all airlines are in the same situation. The crisis forces airlines to reduce its capacity for short term recovery and to rethink of how to handle for the external thread, as airlines are highly sensitive to economic and business cyclical.