Thursday, July 17, 2008

One-To-Go may be one to stop

BANGKOK: Thai budget carrier One-Two-Go Airlines has gone into damage control and may consider a flight hiatus in the face of skyrocketing fuel prices and declining demand.

Founder Udom Tantiprasongchai told the Bangkok Post he was seriously considering grounding the airline ''temporarily''.

''I'm not lying to myself about the reality of the situation," he said. "A painful decision needs to be made.''

One-Two-Go is one of the three no-frills carriers in Thailand, all of which are struggling with fuel prices that have doubled in the past year to more than US$170 a barrel.

Nok Airlines, 39% owned by Thai Airways International, has been bleeding money but won a reprieve from shareholders to continue flying after the management committed to a rehabilitation package. This included lopping services, halving the fleet and cutting senior staff salaries. The carrier hopes to return to a break-even point over the next six months then turn a profit.

Meanwhile, Thai AirAsia is forgoing profit to keep seats filled. While it could be in the red again this year, chief executive Tassapon Bijleveld says he hopes its losses will be less than those of last year.

Udom's plan to suspend One-Two-Go was also influenced by a sense of betrayal from his two rivals, who a few weeks ago agreed to adopt a survival package but failed to follow through. says the Bangkok Post. It had been agreed that the trio would avoid price-cutting while increasing fuel surcharges, raising fares, cutting capacity and dropping low-traffic routes.

Udom said domestic fares needed to go up by 30%, and fuel surcharges would need to increase to better reflect prices.

''In this kind of environment, anyone can go (bust) any time,'' he said.

Meantime, earlier reported on as eOne-Two-Go has cut frequencies on several routes, with Bangkok-Chiang Mai and Bangkok-Phuket flights down to 21 a week from 28, Bangkok-Hat Yai halved to seven a week, and services to Chiang Rai and Nakhon Si Thammarat cut from seven to two a week.

While not ruling out retrenchments, Udom said he was considering the futures of the carrier's 700 employees in the case of a shutdown. Their options could include severance pay, leave without pay or training courses.

But he said the closure of One-Two-Go, which started flying in December 2003, might not be permanent. ''If the situation improves... we could be airborne again.''

Udom insisted that the parent carrier, Orient Thai Airlines, would ckeep flying, with chartered services and scheduled flights to Hong Kong and Incheon.

Orient Thai this year branched out into the freight arena by setting up Thailand's first dedicated cargo carrier, Orient Thai Cargo, using two used Boeing 747-200Fs acquired from Japan Airlines. It has also wet leased an aircraft to SriLankan.

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