Thai AirAsia is asking the government to urgently deal with the sluggish Chinese market by launching a stimulus campaign.
In the meantime, the airline is pivoting to other markets for growth, including an expansion of its domestic operations at Suvarnabhumi airport.
Santisuk Klongchaiya, chief executive of Thai AirAsia, said the Chinese market has grown at a slower rate than expected due to weakening confidence regarding travel safety in Thailand amid a glut of online scams.
In 2019, China accounted for more than 30% of Thai AirAsia's total international route capacity, but the country's contribution to total international route capacity has since fallen to just 17%.
He said while the Tourism Authority of Thailand is targeting 8 million Chinese arrivals this year, during the first quarter Thailand is expected to welcome only 1.5 million Chinese tourists, suggesting the total number of Chinese arrivals for this year will be closer to 6 million.
Thai AirAsia reported lower bookings than expected from China in the first quarter this year.
Mr Santisuk said Chinese tourists are choosing other destinations over Thailand, such as Japan, Malaysia and Vietnam.
The issue of safety in relation to travel in Thailand has also impacted other markets where residents speak a Chinese language such as Hong Kong, Macau and Taiwan.
He said all stakeholders in the public and private sectors must work together to restore tourism confidence.
"The government must allocate an appropriate budget to promote the Chinese market," said Mr Santisuk.
He said restoring tourism could be done in many ways, such as launching campaigns with Chinese online travel agents, or arranging familiarisation trips with key Chinese influencers and travel agents.
The airline is now shifting towards other international markets such as South Asia, which now has an 18% share of capacity on all international routes, up from an 8% share in 2019.
The airline is also maintaining a strong presence in Southeast Asia, including in Vietnam, Cambodia and Laos, while it plans to open new routes via the fifth freedom agreement, which is an international route that neither starts nor ends in the operating airline's home country.
The airline already operates three fifth freedom routes from Thailand to Japan via Taiwan. It is now studying this arrangement for flying via Hong Kong to other destinations, said Mr Santisuk.
In addition, the airline aims to increase the share of domestic capacity to 65% from 60% last year.
Mr Santisuk said domestic flights can generate a profit margin twice that of international flights despite the airfares being lower.
The airline plans to expand domestic routes at Suvarnabhumi airport to 11 by this year, under two Bangkok airport policies, targeting mainly foreign passengers.
He said Suvarnabhumi airport is still underserved in terms of domestic capacity, with only one low cost airline rival.
The airline already saw increasing foreign passengers flying domestic routes last year, sharing 24% of total passengers up from a 20% share in 2019.
