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Thai Airways Uses Fuel Hedging Contracts To Combat Fuel Price Surge

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Thai Airways Uses Fuel Hedging Contracts to Combat Fuel Price Surge

BANGKOK: -- The Thai Airways President said fuel-hedging contracts will help reduce its operation costs in spite of volatile global oil prices.

President of Thai Airways International, Piyasvasti Amranand, conceded that the company was drastically affected by the rising fuel price since fuel makes up 40 percent of total operation costs.

However, the airline has managed the problem via fuel-hedging contracts.

The contracts are due at the end of this year.

Consequently, the company has no plan to raise its fuel surcharge until April. He said the airline will keep closely monitoring the situation in Iran.

Meanwhile, he admitted the company is now suffering from a traffic congestion in Suvarnabhumi International Airport.

Nonetheless, Thai Airways will not move its domestic flights to Don Muang Airport because they must connect to international flights.

In addition, the new value brand airline “Thai Smile” due to take off in May will based at Suvarnabhumi Airport.

Piyasvasti said the company expects to make profit this year, thanks to cost controls.

In addition, the cabin load factor for the airlines in the first two months has reached its targeted goal.

Cabin load factor recorded in February stood at 79 percent and 77 percent in the first half of March.

He expressed confidence that this month’s figure would be higher compared to the same period last year.

Moreover, Thai Airways and other international airline operators filed a petition to the European Union or EU to boycott its carbon credit scheme.

The EU plans to impose a carbon tax on flights landing in the Euro zone beginning next year.

He added the Thai Airway’s operation cost would dramatically increase by 200 to 300 million a year.

He said many countries opposed the scheme due to its unfairness since the EU’s operators are not entitled to pay tax.

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Hmmm; one suspects that other budget airlines are being re-located to DM to make room for Thai Smile operations.

I thought Fuel hedging was used by all International Airlines. Have Thai only just found out about it?

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He said many countries opposed the scheme due to its unfairness since the EU’s operators are not entitled to pay tax.

Right that you protest Sir,because Thailand would never ever consider two tiered rules on anything.

What you said,you will not have to move to Don Muang while ALL other ( read foreign operators) are ordered to operate from Don Muang.

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Hmmm; one suspects that other budget airlines are being re-located to DM to make room for Thai Smile operations.

I thought Fuel hedging was used by all International Airlines. Have Thai only just found out about it?

No, but not as commonly used. A variety of reasons, some to do with the fact that it is ultimately a SOE which can slow down decision making.

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Do Thai Airways ONLY connect to International?? and passengers on all other carriers never connect to International. Bu#s#hit. Smile has been given the preferential treatment being stationed at Swampy, All this stinks to high heaven. This means that I -Using Udon have to get from D.M. to Swampy. Thanks Thai Airways, my pre booked flights are nearly useless for later this year.---oh unless I cancel and book on the favoured airline, then can land at Swampy.... Sick as usual---dictatorial Thailand. and getting worse.

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Hmmm; one suspects that other budget airlines are being re-located to DM to make room for Thai Smile operations.

I thought Fuel hedging was used by all International Airlines. Have Thai only just found out about it?

Yes and yes. THAI got their fingers burned before.

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Hmmm; one suspects that other budget airlines are being re-located to DM to make room for Thai Smile operations.

I thought Fuel hedging was used by all International Airlines. Have Thai only just found out about it?

US airlines have been hedging for a while. Nothing new.

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Hedging cannot reduce THAI fuel cost.

In fact, it could hurt THAI when oil price start dropping.

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Hedging cannot reduce THAI fuel cost.

In fact, it could hurt THAI when oil price start dropping.

Explain how. Haha, I have a series 7 and 66 license and I cannot follow that, but I never use those license either . . . I do recall reading an article maybe a year ago about how much some of the airlines had saved hedging and how they went about it. The savings were pretty dramatic.

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Thai Airways lost a boat load of money a couple years back with their fuel hedging scheme.

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Thai Airways lost a boat load of money a couple years back with their fuel hedging scheme.

Obviously hedging can have a bad result, especially if done by a moron who has little clue. Hedging, however, can be pretty safe if done correctly. Airlines simply offset their increased operating cost loss with a gain in oil investments.

I am still confused how it can never be a successful strategy as stated above. The problem arises only when gas falls so drastically that the investment aspect losses more than the decreased operating costs can offset and no limits or stops on hedge orders. Drops from 140 to 30 a barrel are not common and anaylst usually know these are coming. Mine did in 07 & 08 several quarters prior to burst commencing.

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BANGKOK 26 July 2017 23:34
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