Three low-cost airlines will meet next week to discuss a possible increase in fares or fuel surcharges, while other transportation-service operators are expected to raise fares on August 1 as a result of the renewed hike in world oil prices.

As world oil prices reached a new record high, the domestic gold-bar price jumped 21 per cent from June 15 to Bt12,250 per 15 grams.

Meanwhile, fearing that higher oil prices might further push down purchasing power, the Federation of Thai Industries (FTI) reported that some luxury items, such as cars, had already showed a drop in sales, while basic goods like detergent and toothpaste have shown a year-on-year sales drop.

FTI chairman Santi Vilassakdanont noted that consumers had already tightened their belts: sales of basic consumer products have grown 4-5 per cent so far this year, compared with 6-10 per cent for the same period last year.

"We're asking business operators what their actual situation is," he said, adding that aside from lower domestic purchasing power, political uncertainties could push foreign investment to neighbouring countries.

In regard to low-cost fare increases, Thai AirAsia CEO Tassapon Bijleveld his company and the other two budget airlines - Nok Air and Orient Thai Airlines, which operates the One-2-Go low-cost airline - could consider raising either the fuel surcharge or ticket prices, in order to pass on the burden to passengers.

"Raising fuel surcharges is a better option, because they can be adjusted in accordance with oil-price movements. But if we raise the ticket price, we cannot lower it later. Still, I'm ready to listen to the other proposals," he said.

Orient Thai chairman Udom Tantiprasongchai said such an increase could take effect this month or next.

"All low-cost operators have been affected by the higher prices," he said.

The crisis in the Middle East, including both the Israeli-Lebanese conflict and the Iranian nuclear issue, has pushed up world oil prices.

The Dubai price yesterday jumped to US$72.04 (Bt2,752) per barrel. In Singapore, light sweet-crude futures for August delivery on the New York Mercantile Exchange traded at $77.59 a barrel, up 56 cents from the last floor close. In London, the front-month August Brent contract on London's ICE Futures Exchange was up 49 cents at $78.07 a barrel, after hitting a new high of $78.12 per barrel earlier and surpassing the earlier record of $78.03. Dow Jones Newswires quoted a Shanghai-based analyst as saying technical charts showed it was likely to reach $80 a barrel soon.

Tiraphot Vajrabhaya of Shell Thailand said yesterday that world oil prices should not reach $100 per barrel as feared.

"I hope the Middle East conflict will not get out of hand. But if oil prices stay high, consumers worldwide will reduce consumption, which will bring down the prices," he said. He also suggested the government be more active in campaigning for a fuel-consumption cut rather than having state-owned PTT Plc lead the market.

Panich Pongpirodom, director-general of the Energy Ministry's Business Department, said that so far this year, about 500-600 independent oil traders have shut down their stations.

Even though government officials came out to quash worries about above-target inflation, the higher oil prices are expected to raise operating costs, which will be passed on to consumers.

A source at local Coca-Cola distributor Thai Pure Drinks said the company might increase its product price, in order to cope with a possible surge in operating costs. Earlier, soft drinks raised their retail price Bt1 per unit.

But Somchai Bulsook, president and CEO of Serm Suk Plc, the local bottler for Pepsi, Mirinda and 7-Up, said his company had a plan to maximise its logistics operations as a cost-saving measure during this period of rising oil prices.

Meanwhile, the Land Transport Department will today propose an increase in Bangkok and interprovincial bus fares. Air-conditioned Bangkok bus tickets would be raised by Bt1 and non-air-con buses by 50 satang. Bangkok bus fares would then rise to Bt7.50 to Bt8.50, depending on the type of operator.

Interprovincial rates would increase 3 satang per kilometre.

Department director-general Piyapan Jampasut said the increases could take effect as of August 1.

"We have commissioned a Chulalongkorn University research team to study the fuel costs of all kinds of buses and trucks, so that we can have a standard price-increase formula," he said.

The department is still delaying a proposed increase in public van fares but could reconsider that if oil prices keep escalating.

Deputy Transport Permanent Secretary Kamroblak Suraswadi said interprovincial bus fares could be raised 4-5 satang per kilometre, because every Bt1 increase in diesel price meant a 1-satang increase in the operating cost per kilometre.

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