Published: 3/08/2010 at 04:45 PM
Online news: Aviation
Thai Airways International (THAI) has turned to a joint investment in a new low-fare airline with Tiger Airways because Nok Airlines could not come up with a marketing strategy to expand its business, THAI board chairman Ampon Kittiampon said on Tuesday. Mr Ampon said THAI's market share had fallen due to the competition from fast-growing low-cost carriers. The number of THAI flights within the region plunged from 40 per cent to 10 per cent of the market, while its domestic flights dropped from 50 per cent to 30 per cent. If there are no improvements over the next two years the impact on THAI will be severe, he said. "THAI had been trying discuss a plan to raise its holding in Nok Air from 39 per cent to 49 per cent so it would be more competitive in the low-cost market, but Nok Air was unable to propose a strategy. This is why the THAI board is finding ways to develop its own low-cost airline," he said.
The board chairman said the joint venture plan was proposed by the board members and the plan needed to be considered as it was a business opportunity. "We (THAI) have had talks with Nok Air CEO Patee Sarasin but Nok Air doesn't want to develop itself into a super low-cost airline," he said. Nok Air was not in a position to expand its international routes and therefore THAI had joined forces with Tiger Airways Holdings, he said. However, he said, there was no conflict between THAI and Nok Air. “THAI will press ahead with the joint venture as the co-investment process is in line with the law. As a listed firm, THAI has already reported its new investment plan to the Stock exchange of Thailand. As a state enterprise, the national flag carrier has also proceeded as required by the state enterprise law,” Mr Ampon said.
The THAI chairman said he was ready to clarify to the transport minister any suspicions about the co-investment plan, which was approved by the board of directors of THAI. The Finance Ministry, as THAI's major shareholder, will be asked to consider joint venture proposal, he said. Singapore's Tiger Airways was already well-known in Europe and it was regarded as a 'super low-cost' airline, he said. He was confident that THAI’s 100 million baht investment would be returned within three years. Mr Ampon said if THAI does not get involved in the low cost airlines business, which is growing by 10 per cent and 20 per cent annually, it will lose its markets. THAI and Tiger Airways on Monday signed a memorandum of understanding to create Thai Tiger Airways, 51 per cent owned by THAI and 49 per cent by Tiger, to operate flights out of Suvarnabhumi Airport from early next year.