AirAsia is considering reducing flights from Thailand to China by at least 15% to cope with the Chinese market slowdown, while it encourages the Thai government to maximise tax refund privileges for tourists to urgently stimulate spending.
Tassapon Bijleveld, executive chairman of Asia Aviation, the majority shareholder of Thai AirAsia, said that even though more Thai tourists are flocking to China after the permanent visa exemption started last year, the outbound flows cannot compensate for the absence of Chinese passengers.
He said Thai AirAsia and Thai AirAsia X are studying the Chinese market, which has already entered its low season. The airlines may opt to reduce the number of flights by 15%, shifting to other routes with higher potential such as India, said Mr Tassapon.
The two AirAsia airlines operate flights to 10 cities in China: Guangzhou, Shenzhen, Chengdu, Changsha, Chongqing, Kunming, Hangzhou, Wuhan, Xian and Shanghai.
"The government's planned stimulus should start right away, upgrading the tax refund programme for foreign tourists," said Mr Tassapon.
Beijing is discouraging its population from buying luxury products, resulting in a significant decline in luxury markets in China since last year.
Mr Tassapon said Thailand should seize this opportunity by offering more attractive tax refunds to capture tourists who still have spending demand.
The value-added tax of 7% in Thailand is relatively low compared with other countries, such as Japan, which offers a 10% refund for tourists, said Mr Tassapon. China also adopted this policy by increasing the tax refund rate to 13% to lure international expenditure.
"Our country might lose some revenue from tax collection if we provide higher refund values to tourists, but the amount of money they spend would bring greater benefits to the overall economy -- not just for luxury retailers, but for businesses across all sectors," he said.
Mr Tassapon said implementing instant, on-the-spot tax refunds is also essential. A pilot programme could be launched during low season in the third quarter, allowing the government to evaluate the results before considering a long-term rollout.
The call from AirAsia is in unison with other business sectors, including the Association of Thai Travel Agents and the Thai Retailers Association, which have previously urged the government to implement a more convenient tax refund process and offer higher refunds for tourists.