Signs Of A Tourism Recovery in Asia

February 4, 2022 Edward Dever

A sure sign that Thai authorities believe that Covid-19 has turned a corner and tourism recovery may be on the way is the reappearance of the Thetsakij on Bangkok's streets.

Absent for almost two years, these Bangkok Metropolitan Authority (BMA) inspectors fine people (mainly unwitting tourists) for littering. As a general rule, you don't need to litter to be accosted by these inspectors who will claim you dropped a cigarette butt and should pay a THB 2,000 fine. It is just another scam mainly targeting tourists, just dressed in official BMA uniforms.

While the Thetsakij's reappearance on Bangkok's streets may indicate some tourism optimism (and some tourists have returned), the reality is a little different.

In December 2021, Thailand suspended its Test & Go quarantine measures following the emergence of the Omicron variant. The suspension was lifted on 1 February, however, there is no guarantee that further suspensions will not occur.

The suspension highlighted the risk for travellers trying to navigate the rules for international travel. The risk of getting stranded in another country is high, particularly if you test positive for Covid-19 and are unable to travel until obtaining a negative test or a certificate of recovery (apparently not accepted by all airlines).

Test positive on arrival into Thailand or be a close contact of a case and you face quarantine in a hospital or hotel (hospitel). While Covid-19 insurance is mandatory for foreigners as part of the Thailand Pass entry requirement, this insurance may not cover all quarantine circumstances. It pays to read the fine print.

Restarting the travel sector is not as simple as flicking a switch. The sector in Thailand and across South East Asia remains in tatters. Many companies will not be revived, lacking the funding to rebuild their businesses, rent office premises and rehire employees, let alone deal with the debts remaining from pre-Covid times.

For those able to survive, there is an opportunity to build back a leaner, more efficient operation and adopt better and more flexible work practices. The survivors may also benefit from a lack of competition in certain areas as their former competitors are liquidated.

It is pleasing to see that Pandaw Cruises will likely survive. Having announced their permanent closure in November 2021, they have now secured funding to see them through to September 2022, when they anticipate restarting operations.

Pandaw Cruises - December 2021 Update

Back on Bangkok's Streets - The 'cigarette police' who target foreign litter bugs (2013)

Warning against traveling to Thailand

February 2022

The content of this publication is intended to provide a general overview on matters which may be of interest. It is not intended to be comprehensive. It does not constitute advice in relation to particular circumstances nor does it constitute the provision of legal services, legal advice or financial product advice.

Thai-based Airlines Battle Covid Restrictions

August 15, 2021 Edward Dever

Flying under the radar is the recent creditor approval of the rehabilitation plan for Nok Air. The plan goes before the Central Bankruptcy Court on 26 August 2021 for approval.

The prospects for airlines such as Nok Air and Thai Airways seem grim at present given the surge in Covid-19 cases throughout Thailand.

In July, the Civil Aviation Authority banned all flights to and from provinces declared Covid-19 hotspots (dark red zones) forcing all airlines to halt domestic operations. Nok Air shifted its temporary base to U-tapao airport near Rayong in an effort to keep some flights operational and continue to service Phuket which has reopened to vaccinated foreign tourists under a Sandbox model, as well as limited other flights.

The Government was forced to make exceptions to the grounding of flights to support the viability of the Sandbox programs like Phuket and Koh Samui.

Reported Covid-19 cases in Thailand currently exceed 20,000 per day (out of an estimated population of 70 million). The actual case numbers are likely to be significantly higher. The Government's admission that cases are likely to double in the next month indicates a failure of current restrictions to contain the spread of the Delta variant. The Government's approach to dealing with the Delta variant has been 'too little too late' although the rollout of vaccinations continues.

After much success battling Covid-19 in 2020, several policy failures have helped the spread of Covid-19 throughout Thailand, including the failure to cancel the Songkran New Year holidays in April and shifting Covid-19 positive cases back to their home provinces to alleviate the strain on Bangkok's medical resources.

The failure to enforce a proper lockdown is linked to business pressures and an inability to offer anything more than meagre Government financial support to individuals affected by a lockdown. Lockdowns also make social distancing more difficult for multi-generational households.

With a significant portion of the country's annual GDP linked to foreign tourism, the battle ahead for Thai-based airlines and other tourism related business is a mammoth one. The Government's plans to completely open up the country to vaccinated foreign tourists by mid-October (the 120 day plan) seem in tatters with the airlines remaining on life support.

Nok Airlines PCL - Creditors’ Meeting Resolution

CAAT allows special Sandbox charter flights to Bangkok

Country to reopen 'in 120 days'

August 2021

The Telltale Signs of Economic Malaise

July 15, 2021 Edward Dever

In 1998, I was looking out from a 19th floor window of Telecom Tower on Ratchadaphisek Rd in Bangkok towards the plots of land below. It was during a break in one of the interminably long creditor meetings for TelecomAsia, part of the CP Group.

Among the buildings was a plot of land covered in pink taxis, handed back to the taxi company by drivers unable to make a living in the post-1997 Asian Economic Crisis world.

The floating of the baht by the Thai government on July 2, 1997 precipitated a wider Asian economic crisis engulfing, among others, the economies of South Korea, Indonesia and the Philippines. The seeds of Thailand's crisis had, however, been sewn a number of years earlier.

1998 was before widespread mobile phone use in Thailand (and phones with cameras) so I didn't take a photo of the flamboyance of pink taxis below. People didn't take cameras to restructuring meetings.

One interesting aspect of the TelecomAsia group restructuring involved debt associated with the roll out of the Personal Cordless Telephone (PCT) network in Bangkok. This was an ultimately unsuccessful forerunner of today's mobile networks which was popular at that time in Tokyo. It allowed you to use your home phone number as a mobile number with enough handsets for the whole family. Wander the streets of Bangkok and you can still see relics of the network - decommissioned cell sites attached to telegraph poles with the telltale "PCT' logo.

Fast forward to 2021 and another economic crisis - this one brought on by Covid-19.

Taxis are once again being parked en masse as drivers struggle to find fares in a city without tourists and with many workers working from home or unemployed.

As Thailand trials reopening the country with its Phuket Sandbox model for vaccinated travellers as well as ramping up vaccination efforts, it is hoped that these taxis will soon be circulating throughout Bangkok once more. However, with reported daily Covid-19 case numbers over 9,000 for Thailand, the reality is that they may be parked for some time.

Business baffled by gaffes

July 2021

South East Asia Tourism - Darkness Before The Dawn

January 18, 2021 Edward Dever

A year ago, I wrote about Covid-19 and the potential decimation of Asia's tourism sector.

In hindsight, I underestimated the length of time it would take countries to get Covid-19 under control.

In the case of Thailand, a Covid outbreak in the past month centred on markets outside Bangkok, staffed predominantly by migrants, has resulted in a semi-lockdown. Tourist spots which had realigned towards the domestic market have taken a further battering. (How Thailand Was Caught Out)

Thailand has been largely unsuccessful trying to restart international tourism with a quarantine component. (Thailand - No-one Came)

Contrast this approach with Maldives which has been open for quarantine-free tourism for several months. (Maldives Monitors Arrivals)

Across South East Asia, tourism ventures are mothballed or dead in the water. Some companies still operating have opted to give up office space to save costs and are operating from serviced offices.

It is not all gloom and doom. Some OTAs are actively recruiting, seeking to replace some of the staff made redundant last year as they try to position themselves for economies reopening hopefully during 2021 as Covid-19 vaccination becomes more widespread.

There will be plenty of restructuring ahead. Not all tourism players will survive. New players will emerge and everyone will need to adapt to a post-Covid tourism world.

January 2021

Thai Airways Rehabilitation Proceedings Recognised In Australia

August 31, 2020 Edward Dever

The recent Australian Federal Court judgment recognising the rehabilitation proceedings in Thailand of Thai Airways reveals several interesting facts regarding THAI.

- THAI's Royal Orchid Plus frequent flyer member details (1.398 million members) are not maintained in a single searchable data base. (Over 87,000 members are based in Australia.) This is extraordinary and likely due to a lack of foresight in upgrading the membership systems as membership grew. It highlights the difficulty of dealing with this group as part of the restructuring.

- In addition to Australia, THAI has sought and obtained orders for the recognition of the Thailand rehabilitation proceedings in Germany, Switzerland and Singapore. THAI has also sought recognition in Japan.

- Trading losses for the financial year to 31 December 2019 were the THB equivalent of AUD 567.7 million. Note this was before the onset of Covid-19 and the shutdown of flights.

- THAI's assets in Australia comprise primarily leased assets and cash.

Didyasarin v Thai Airways International Public Company Limited [2020] FCA 1154

August 2020

Thailand - From 40 Million Foreign Arrivals to Zero

August 10, 2020 Edward Dever

Clear signs of the carnage emerging from Covid19-related travel restrictions.

The closure of two long-standing inbound travel companies in Thailand, Asia World and CBS Travel Asia, is an indicator of the depth of financial calamity faced by destination management companies (DMCs) as a consequence of closed borders and zero tourists.

The comments by AWE sum up the predicament faced by many DMCs:

“Asia World has had no business for the past four to five months and no income because of Covid-19. It seems that tourists will not return to Thailand for a long time, which could be in 2021 or 2022, but nobody can be sure.”

The key to survival is summed up by Asian Trail's CEO:

“It’s all about cash,” said Laurent Kuenzle, CEO, Asian Trails. “Do you have enough to survive, not for three months but 1.5 years? Do you have savings or are you indebted? How much money can you save by reducing expenses, without destroying your company and without losing quality and trained manpower when tourists return?”

Expect more regional closures, particularly those DMCs without recourse to deep pockets to ensure survival.

Thailand’s 60th Tourism Anniversary Turns to Nightmare as Longstanding Travel Agencies Start Closing

August 2020

Nok Air Follows THAI Into Formal Rehabilitation Proceedings

July 31, 2020 Edward Dever

Thai-based airline, Nok Air, has announced it will follow Thai Airways International into formal rehabilitation proceedings.

Nok Air is part owned by THAI (around 13%) and has been unable to fly its 18 international routes due to Covid19 and its domestic routes in 23 provinces are running at around 30% of its normal schedule.

Nok Air claims that only 200 customers are still awaiting refunds.

"Nok Air insisted on Thursday its business would be able to return to solvency despite the airline following Thai Airways' lead and filing a business rehabilitation request with the Central Bankruptcy court."

Nok Air will be just fine, insists CEO

July 2020

What Next For Thai Airways?

May 21, 2020 Edward Dever

Rumours circulated in Thailand earlier this week that Thai Airways would file for bankruptcy.

This claim was denied by THAI which is preparing a rehabilitation plan for Government approval. More likely is that THAI may enter formal rehabilitation proceedings under the Thai Bankruptcy Act

Prior to 1998, liquidation was the only option under the Bankruptcy Act. Proceedings involving large companies were about as rare as a black kookaburra. In 1998, Chapter 3/1 was added providing a form of rehabilitation proceedings similar to US Chapter 11.

It was subsequently confirmed that THAI will enter formal rehabilitation proceedings under the Thai Bankruptcy Act following Cabinet approval.

This will be the highest profile case through the rehabilitation proceedings introduced in 1998 and certainly the largest case since the Asian Economic Crisis.

From the media reports, it seems that the Ministry of Finance will reduce its majority shareholding as part of the restructuring although this could just be shifted to another Government fund. THAI will no longer be a considered a State Owned Enterprise with the employees' union to be disbanded. It is not clear how THAI will be funded during the rehabilitation.

It also not clear how existing ticket holders will be treated.

Under the Thai Bankruptcy Act, all amounts owed at the date of the rehabilitation order, are normally quarantined and creditors must file claims for these amounts.

Don't discount authorities coming up with a solution which treats ticket holders fairly that doesn't strictly comply with the Bankruptcy Act.

THAI carried around 19.4m passengers in 2019 which is an indicator of the complexity of dealing with ticket holder creditor claims.

THAI - Cabinet gives nod to THAI rehab
https://lnkd.in/gsjk2EP

May 2020

Covid-19 and Tourism's World of Pain

May 9, 2020 Edward Dever

A small insight in the world of pain the tourism sector is currently encountering.

"Thousands of hotels in Thailand are crying foul after TUI Group, a global tourism business based in Europe, submitted letters asking to delay repayment on debt that has grown to 2 billion baht (USD 62m)."

"The vast majority were asked to accept 25% of debt within 10 days after signing a new contract, while the remaining debt will be paid when TUI's business is back to normal."

TUI is a gorilla in the world of package tourism. Hotel operators rely on payment of high season invoices (including Jan-Mar) to allow them to get through the low season. The impact of Covid-19 makes this cash flow crucial. Payment of 25% with the balance payable at some point in the future will be of little comfort to hotel operators trying to deal with their own creditors and employees.

The difficulty for hotel operators is that, by not agreeing to TUI's terms, they risk being frozen out of future package deals when tourism recovers. The article hints that the dispute may be escalated to a government-to-government level.

Expect the other large tourism players to be taking a similar stance.

https://lnkd.in/gjV46GT

May 2020

Crisis Management in the Shadow of Coronavirus

March 11, 2020 Edward Dever

Amid the chaos surrounding Coronavirus and its impact on the travel sector in Asia and elsewhere, a familiar problem has reared its head. The inability of some governments such as the Thai Government to speak with one voice.

This was particularly apparent during the 2011 Bangkok flood crisis where there was complete inconsistency in Government messaging on a daily basis. Would Bangkok flood or not? How bad would the flooding be? A tech company which volunteered to partner with the Thai Government to assist with online flood awareness messaging quit the arrangement in disgust.

And so to 2020 and COVID-19.

In recent days, the Government has shifted gears on quarantine measures and created yet more confusion. The Health Minister issued an updated quarantine notice on particular foreign countries only to quickly withdraw it and deny he had signed it.

Last week, France, Germany, Japan, Singapore and Taiwan were dropped from the quarantine list by the Thai Ministry of Health so many international schools lifted quarantine measures on people with recent exposure to these countries. The Ministry of Education then intervened, advising that these countries remained on their quarantine list resulting in the closure of a number of schools who had acted on the Ministry of Health's earlier advice.

The Thai government has now announced that visitors from quarantined countries (currently China including Macau and Hong Kong, South Korea, Italy and Iran) need a doctor's certificate before they will be issued a boarding pass for their flight.

The form to be completed indicates that the doctor signing the form must have observed the patient for 14 days before travel and that a COVID-19 test has been administered and returned a negative result. The form must be signed no more than 48 hours before travel.

In practice, anyone travelling is unlikely to be able to comply with these requirements. Testing in places such as Hong Kong is only available in certain places and is not currently being undertaken by GPs.

To add to the confusion, Thai Airways says the requirement applies to returning Thai nationals; Cathay Pacific says it does not.

How does a person travelling frequently between Hong Kong and Bangkok comply with the 14 day observation requirement? Is a fresh COVID-19 test required before each flight?

In these circumstances, client updates must emphasis the fluid nature of government advice. The best approach is to anticipate government messaging flip flops and confusion and hold messaging until different government departments have had time to issue contradictory advice. In the time sensitive tourism sector, this is not particularly easy in practice.

Govt risks being the next casualty of COVID-19 https://lnkd.in/fMJtJWu

PELEN

March 2020