Rising oil prices threaten Thai tourism

Rising global oil prices are expected to strain Thailand's tourism sector and dampen sentiment ahead of next month's Songkran festival, the traditional Thai New Year.

"Airfares between China and Thailand have increased by 20 to 30 percent compared to the same period last year," said Liu Jia, a Chinese traveler planning a family trip to Bangkok and Phuket next month.

Although cheaper tickets may be available on some dates, many are red-eye flights or long layovers, she said.

Liu booked her round-trip tickets two months ago, avoiding the recent price hikes. But reports of fuel shortages in Thailand have raised concerns about whether her planned self-drive tour will be feasible.

"I heard many gasoline stations in Thailand have long lines. If self-driving is difficult, maybe taxi fares in Phuket will be even higher," she said, worrying the holiday may prove "far less enjoyable" than expected.

Thailand is among Asia's most energy import-dependent economies, leaving it particularly vulnerable to global price volatility. Net energy imports accounted for about 6 percent of GDP last year, one of the highest levels in Southeast Asia, according to Bank of America Global Research.

Amid the effective closure of the Strait of Hormuz, concerns over fuel supply have spread rapidly across Thailand, despite the official assurances that oil reserves are sufficient for 60 days. Local media reported that some gas stations outside Bangkok posted "out of stock" signs while residents in southern provinces wait in long lines with containers to secure fuel.

Thailand's two major energy companies, PTT and Bangchak, raised prices of petrol and gasohol — a mixture of gasoline and ethanol — from March 21. Gasohol 95 rose by 1 baht to 33.05 baht ($1.01) per liter at both companies' stations, while diesel climbed to 31.14 baht per liter, up 0.7 baht.

Energy constraints, rising travel costs and fragile tourist confidence are beginning to affect travel decisions by both domestic and international tourists, the Federation of Thai Tourism Associations said in a statement based on member feedback.

Effects on economy

The federation said the effects extend beyond tour operators to the wider economy. Thailand's tourism industry is worth 2.7 trillion baht ($82.81 billion), accounting for about 13 percent of GDP and supporting around 4 million jobs, making it a key economic engine.

The oil shortage is not only an energy issue but also a crisis of confidence, particularly during Songkran, the group said. If travelers are uncertain about fuel availability, they may cancel trips, weighing on the tourism sector as a whole.

Meanwhile, Thai Airways International is preparing to seek approval from civil aviation authorities to raise fuel surcharges as jet fuel costs surge, a move estimated to lift average ticket prices by 10 to 15 percent, CEO Chai Eamsiri said.

Jet fuel prices have climbed from about $80 per barrel before the Middle East conflict to $220, and could rise further to $240 if the war drags on through May, Chai told the Bangkok Post.

Higher airfares "reflect real costs, not opportunism", he said, adding that demand has weakened, particularly among long-haul travelers to Europe and Australia.

Regional tensions have also weighed heavily on bookings from Europe and the Middle East. Figures from the Thai Hotels Association showed that advance bookings for the Songkran holiday have dropped to 55-60 percent from as high as 70 percent, with no new bookings from the two regions.

During the Songkran holiday, many Thais also prefer to travel long distances by car or to fly abroad. If the conflict escalates, the impact on tourism could be significant, said Thanapol Cheewarattanaporn, president of the Association of Thai Travel Agents.

"So far, we've seen a slower booking pace for the Songkran holiday as many tourists reassess their plans," Thanapol said, adding that short domestic trips, particularly to destinations near Bangkok, are likely to be less affected.

Travel agencies are expected to keep package prices broadly unchanged or raise them slightly, given uncertainty over further fuel cost increases that could erode margins, he said.