Sunday, May 31, 2009

Thailand's Gripen Second Batch Row Along The Month!

Yes, there are only news news and news.

The most news publish outside Thailand said RTAF already abadon the plan to buy the second batch.

But the case is that it’s a bit of misunderstanding. In fact, the second batch is just to complete the overall project of 12 jets.

Just 6 jets are worht only the aerobatic sqn., so the other 6 is definitely and Thai-language news only report the word ‘delay’ which it’s a worse thing to happen.

Come back to the topic, in fact RTAF show the sign that they want to push the early commitment in second batch early this year, but that’s before the defense budget cut come to an effect.

In general, armed force faces around 10% or 20,000 million Baht in budget cut which RTAF shares 3,400 million Baht. RTAF have an agreement to commit for the second batch in 2010. So if there are a delay it would shift to 2011 or 2012.

But whatever the case, another 6 is definitely. The real question is they still able to keep on the original schedule (2010) or just delay it.

In my opinion the delay is also likely, but the thing is RTAF uses their own annual budget to buy the Gripen. That’s mean if they can manage themselve they still can keep on the schedule, just to seek for an approval to commit from the cabinet.

So wait for the cabinet decision, if they give a green like, I don’t think it would be any delay.


Jet purchase plan shelved by air force
Commander grumbles about govt budget cuts
Published: 9/05/2009 at 12:00 AM
Newspaper section: News

Budget cuts have compelled the air force to shelve its planned purchase of six more Swedish-made Gripen fighters.

As the government decided on Wednesday to slash the defence budget for the next fiscal year from 171 billion to 151 billion baht, the air force had to ditch its plan to order six more Gripen fighter jets worth 15 billion baht, commander Itthaporn Subhawong said.

The air force has already bought six Gripen jets worth 19 billion baht with the planes due for delivery next year.

The air force needs the other six Gripen jets to complete a fleet of 12 that will replace its ageing F-5 fighters scheduled to be decommissioned in 2011.

With only six Gripen jets, the air force was not confident of protecting national security, according to the air force chief, who also warned that the decision would weaken national defence where competitive weaponry is vital.

“This affects the potential of the armed forces because they need modern weaponry. If we must defend the nation with weapons that cannot match [our enemies'] or are outdated, nobody will have respect for us,” ACM Itthaporn said.

He said that the six other Gripen jets were necessary for national defence.

“We must explain what is essential and need a review from the government. Weapons result in national security. Without strong defences, neighbours will not have respect for us.

“We, all soldiers, are ready to sacrifice our lives for the nation but in any fight we must have competitive weaponry. The life of every soldier is valuable. If a conflict erupts and we have weapons that do not compare, soldiers will be killed,” he said.

The Swedish fighters will be stationed at the air force base in Surat Thani to protect the Gulf of Thailand, the Andaman Sea and all areas in the southern region of the country.

The air force plans to use them as its main fighters instead of the F-16 jets used now.

The Defence Ministry was one of the agencies hit hardest by the budget cuts, implemented because government revenues have fallen short of target and the need to raise money to pay for economic stimulus schemes.

A ministry source said there was a question whether relations between the Democrat Party-led coalition and the armed forces would sour because the armed forces had supported the government but received budgetary reductions in return.…d-by-air-force


Defence is in need of Gripen fighters
By Panya Thiewsangwan
Published on May 30, 2009

“As and when the economy improves and the country is in a position to earmark the budget for security-related procurement, the fighter jets will be bought and deployed,” he said.

Prawit said he expected the Cabinet to approve the procurement plan in principle, pending the state of the economy, at its meeting next Tuesday

Defence Minister Prawit Wongsuwan yesterday said his ministry would push for the Bt15.4-billion procurement of six Gripen fighter aircraft, although they would only be bought when the fiscal situation permitted such a costly purchase.

The procurement, if approved, will be spread over five years from the next fiscal year starting in October.

Prawit said the six Swedish jets, when added to the other Gripens already in deployment, would form a wing of 12 fighter aircraft, replacing the ageing F-5 jets that have been in service since 1966.

He said all military procurement plans had been put on hold in light of the economic downturn. However, the Air Force needs to have its budgetary plan approved in principle in order to make the necessary preparations for deployment of the aircraft.

The proposed Bt5-billion purchase of four search-and-rescue helicopters will be treated in the same way, the defence minister said.

The Air Force is eager that the public fully understands the ministry’s procurement plan, said deputy spokesman Group Captain Monthon Satchukorn.

If the government deems it necessary, Air Force chief Air Chief Marshal Ithiporn Suphawong is willing to withdraw the plan in order to delay the Cabinet debate on the issue, Monthon said.

The plan has been forwarded to the Cabinet with an understanding that the budget would be approved in principle without actual disbursement of funds at this juncture, he added.…s_30103928.php


A bit of politic view.

New govt rift fears as jet plan revived
Prawit pushes Gripens, coalition tension likely
Published: 30/05/2009 at 12:00 AM
Newspaper section: News

An attempt by Defence Minister Prawit Wongsuwon to revive the air force’s procurement of Swedish-made Gripen jet fighters despite military budget cuts is likely to raise tensions between the Democrat Party and its key coalition partner, Bhumjaithai.

The move opens the way for a fresh conflict between the Democrats and its influential coalition partner following differences over the 4,000-bus lease project, the auction of the government’s mortgaged crops, and the public land rental scheme.

Gen Prawit, who has close affiliations with Bhumjaithai, said yesterday he would ask the cabinet next week to approve in principle the 5.4-billion-baht project to buy a second batch of Gripen fighters and 5 billion baht for search and rescue helicopters.

“I just want the cabinet to approve the procurement in principle. It is for the sake of reassurance.

“When the country has money to attend to security affairs, we will buy them. I do not think endorsing the project in principle will cause any damage,” said Gen Prawit, who stressed the air force needed the Gripens to replace its F-5Es which will be decommissioned later this year. He said he would explain the need to the Budget Bureau and Prime Minister Abhisit Vejjajiva.

“There is no hidden agenda,” said Gen Prawit, who is tipped to join the Bhumjaithai Party soon.

His push is seen as yet another move by Bhumjaithai to test the Democrats’ sincerity in honouring the coalition partnership. The Democrats have put the brakes on the Commerce Ministry’s planned sales of mortgaged crops and the Transport Ministry’s 67.9-billion-baht bus lease plan. Both ministries are under Bhumjaithai’s supervision.

Bhumjaithai heavyweights appear to be opposed to the Democrat Party’s proposal to allow farmers to rent public land at 10 baht per rai for farming.

The scheme, the brainchild of Deputy Interior Minister Thaworn Senneam who oversees the Land Department, apparently lacks support from Interior Minister Chavarat Charnvirakul, the Bhumjaithai leader, and Saksayam Chidchob, his chief adviser and a core member of Bhumjaithai.

Deputy Interior Minister Boonjong Wongtrairat, another Bhumjaithai key figure, denied Mr Chavarat was opposed to the scheme. The minister was merely concerned that it could be exploited by the rich.

“Mr Chavarat wants the scheme to be examined thoroughly. He fears state property will be abused,” he said.

Mr Saksayam said the party was not using the land leasing plan to gain Democrat support for the mortgaged crop sale and bus rental projects.

“The land rental project has just been raised for discussion. An inspection is under way to separate state land from private property.”

Mr Chavarat said the land leasing scheme was a sound project and Mr Thaworn could submit it to him for further submission to the cabinet.

Democrat spokesman Buranat Samutarak dismissed any rift over the land leasing scheme, saying the Bhumjaithai Party had raised concerns but did not oppose the project.

Meanwhile, the air force said it was uncomfortable with the defence minister’s push to revive the Gripen purchase plan, as it feared the public might misunderstand. Air force spokesman Grp Capt Monthon Satchukorn said air force chief ACM Itthaporn Supawong would ask Gen Prawit to review the project and withdraw it from the cabinet meeting’s agenda.…t-plan-revived



Published: 29/05/2009 at 12:00 AM
Newspaper section: Business

Bangkok Aviation Fuel Services Plc (BAFS) provides aviation fuel services including aviation depot and aircraft refuelling service at Bangkok International Airport. Its major shareholders consist of Thai Airways International Plc, Caltex Oil (Thailand) Ltd, PTT Plc, Esso (Thailand) Plc., The Shell Company of Thailand Ltd, Airports of Thailand Plc, Air Total (Thailand) Co Ltd, and ExxonMobil Aviation Inc. BAFS was listed on the Stock Exchange of Thailand on April 4, 2002. Jarern Pavarojkit, the deputy managing director for operations, discusses the company's strategy and outlook.BUSINESS

Jarern: Double-digit growth at year-end

1. Please explain BAFS's business model.

BAFS provides services in the aviation refuelling industry at Suvarnabhumi, Don Mueang, Samui and Sukhothai airports. Our scope of services comprises: aviation fuel depot receiving and reserve storage; distribution of aviation fuel via a hydrant pipeline network under the aircraft aprons; and into-plane refuelling services for aircraft.

The business model at Suvarnabhumi is different from Don Mueang. At Don Mueang, BAFS is the sole aircraft-refuelling provider. We provide the fuel depot facilities to handle the Jet A-1 for fuel suppliers and then refuel all aircraft landing at Don Mueang. We rent the hydrant pipeline system from Airports of Thailand Plc (AOT) and refuel aircraft with our dispenser trucks. At Suvarnabhumi we provide services including an aviation fuel depot and aircraft refuelling storage. BAFS was granted the concession by AOT to be one of two into-plane service providers, and we invested in fuel depot facilities. The hydrant pipeline at Suvarnabhumi was invested in and is operated by TARCO, in which BAFS holds a 90% stake.

2. Please explain BAFS' pricing and cost structure.

BAFS has two different pricing and cost structures. At Don Mueang the pricing structure consists of a storage fee, hydrant fee, and into-plane fee which together are called the combined user fee (CUF), paid by fuel suppliers. At Suvarnabhumi, the pricing structure consists of a storage fee and into-plane fee.

Our major costs at Don Mueang are the hydrant pipeline rental and land rental charges that are about 30% of total cost, and also depreciation.

Given the shift of Thai Airways flights from Don Mueang to Suvarnabhumi our revenue has dropped drastically at Don Mueang and we are in the process of renegotiating this issue with AOT. However, THAI is still our client at Suvarnabhumi. For Suvarnabhumi, because of our huge investment in the pipelines, fuel storage and other equipment, depreciation represents 28% of our total costs with the remainder consisting of labour and the airport concession fee (ACF). The ACF represents close to 18% of our total cost at Suvarnabhumi and is linked to service volume.

3. Who are BAFS' customers?

Our customers are the oil trading companies, Thai Airways International, PTT, Chevron (Thailand), Q8 Aviation, Shell Thailand, Air Total (Thailand), Singapore Petroleum (Thailand) Co Ltd, BP Oil (Thailand) Ltd, ExxonMobil Aviation Inc and Bangchak Petroleum. Our top 10 airline customers are THAI, Thai AirAsia, EVA Airways, China Airlines, Emirates, Qantas, Cathay Pacific, Air France-KLM and Japan Airlines.FINANCIAL PERFORMANCE:

1. In March 2009, BAFS's management based its forecasts on Thai Airways guidance and provided guidance that uplifting volume would only drop by 2% this year. Given the drop of tourism by 50% in the first quarter, the continued political turmoil and the huge drop in global trade, is BAFS still confident in this target?

We are still confident in this target that uplifting volume of 2009 would only drop by 2% from last year as monthly actual volume growth from January to April was in line with our forecasts. Provided there are no further incidents in Thailand and/or globally, we forecast that uplifting growth would be in double digits in the last two months of 2009 when compared to 2008.MISCELLANEOUS:

1. What do you feel are the biggest risks facing BAFS's business today?

BAFS, as a company, is linked to Thailand's ability to grow as an international economy and an aviation hub for the region. Our risks are on two fronts: the global economic slowdown which, if continued and drawn-out, would reduce Thailand's aviation business and tourism would decline. Second, if there are continued domestic problems tourism would experience more pressure. As a company we have imposed strict cost-saving measures as of the end of last year in order to combat these factors.

2. Has the global slowdown or local political turmoil affected your business?

Yes, because of the global slowdown and local political turmoil, our uplift volume growth in November and December of 2008 dropped by 24% and 28% respectively. As we mentioned earlier, BAFS is prepared for these risk factors. We have put in place risk management policies by controlling expenses in every department and generating monthly financial reports to top management in order to maintain performance and maximise shareholder value.

3. Where do you see BAFS in five years from now?

In five years from now, BAFS will continue to provide services to AOT and ensure that Thailand can compete on a regional basis with our services. Our balance sheet will be stronger as our long-term debts would be slightly lower when compared to our equity base and we hope to continue to provide a consistent return on investment to our shareholders.

The Executive Q&A Series is presented by ShareInvestor, Asia's leading financial internet media & technology company, and the largest investor relations network in the region with more than 400 listed clients. The interview is conducted by Pon Van Compernolle, managing partner of GVC Capital, an investment advisory firm focused on small-mid caps in Thailand. For more information, e-mail or or visit

US digital surveillance cameras to be used by Thai military


Thailand's army will use digital surveillance cameras made by a Rocky Hill company to fight crime, drug trafficking and terrorism in the southeast Asian nation.

Contractor Aria International Inc. purchased five high-definition, infrared cameras from Axsys Technologies Inc. in Rocky Hill that will be mounted aboard the Royal Thai Army's helicopters, Aria said.

Camera prices were not disclosed.

Aria International, based in Arlington, Va., has a $9.7 million contract to equip and train the Thai army to use surveillance and communications technology in its homeland security.

Axsys is studying strategic options, including a sale of all or part of the company.

Thursday, May 28, 2009

Thailand's PB Air aims to grow as it flies back to profit

ATR turboprops help revive balance sheet

Published: 27/05/2009 at 12:00 AM
Newspaper section: Business

PB Air, the airline run by Singha beer baron Piya Bhirom-Bhakdi, has begun to see a return to profitability as its business plan bears fruit.

"We are slowly coming out of the mud of red numbers," Heribert Gaksch, director for marketing and business development at PB Air, declared yesterday.

The carrier, now 19 years old, saw a turnaround on its balance sheet following a fleet change, cost controls, and a marketing and distribution beef-up in February of this year.

The driving force to profitability is the substitution of its two Brazilian-made Embraer ERJ 145 LR jets with two ATR 72-500 turboprops leased from Bangkok Airways, the kingdom's second-largest carrier.

The turboprops have provided better economic yields than the Embraers, which PB Air returned to the American aircraft lessor Gecas on April 18 after seven years in the airline's service.

The addition of the turboprop, which can seat 70 passengers instead the Embraer's 50, as well as a stepped-up marketing effort including longer operating hours for its call centre and the creation of sales counters at Krungthai Card branches enabled PB Air to sell more seats.

PB currently fills an average of 80% its seats.

The airline operates 10 flights a day on six secondary domestic routes from Bangkok to Lampang, Nan, Nakhon Phanom, Sakhon Nakhon, Buri Ram and Roi-Et _ all unique routes.

PB Air is due to launch regular service to Mae Sot on June 5 with three flights a week, and it hopes to begin operating flights to Chumphon in the next few months, said Mr Gaksch.

The improved financial results have seemed to encourage Mr Piya to keep the carrier flying.

PB Air is assessing its options for a future fleet after the initial "dry" lease of ATR 72-500s, covering aircraft but not crew, expires in October this year.

It has been in talks with aircraft lessors for long-term leases of two ATR 72-500s or it may extend the agreement for the two planes with Bangkok Airways.

Bangkok Airways has a fleet of nine turboprops, excessive in light of the slowdown in demand caused by the economic crisis and political turmoil.

Mr Gaksch said PB Air needs to have three such turboprops to support its route expansion or if it wants to offer charters.

Meanwhile, the airline is upbeat about the potential of the Mae Sot service with a likely 40-50 leisure and business travellers on each flight.

An introductory one-way fare of 2,600 baht, 300 baht lower than the normal listed rate, has been offered for the first month of operation.

Asia-Pacific tourism forecast for 5-10% slump


Published: 27/05/2009 at 12:00 AM
Newspaper section: Business

The Asia-Pacific tourism industry will contract by 5-10% this year due to the combined impact of the world economic crisis and the outbreak of H1N1 influenza, according to the global reservations specialist Amadeus.

David Brett, the president of Amadeus Asia-Pacific, said economic problems would dent tourist confidence, particularly among Europeans, and that H1N1 was a big concern for tourism around the world.

But the company is confident it can gain market share in the region as it has continuously invested in IT and research and development for operators including airlines, hotels, and travel agents.

Amadeus expects its market share in Asia-Pacific to grow by two percentage points to around 32% this year. Its share in Thailand is much higher at 76%.

In the first quarter of 2009, Amadeus Asia-Pacific accounted for 40% of the region's airline and hotel bookings. Last year, the travel bookings through Amadeus worldwide fell by 4% while the overall global distribution system (GDS) market contracted by 7%.

Thailand, said Mr Brett, is one of Asia-Pacific's key markets. Against the backdrop of the financial crisis and political unrest, tourist arrivals to the country fell only 1% to 14.3 million last year.

"Our key partnerships with major Thai travel players such as Thai Airways and Centara Hotels help us grow. We continue to see growth opportunities here as it becomes a more mature market with a stronger influence on the global tourism industry," he said.

Travellers to Thailand will prefer fewer, shorter and cheaper trips and domestic travel by car will be more popular. Travel agents will be concerned about payment, so online bookings could grow.

As well, he said, airlines would cut costs to maximise revenues and fine-tune online distribution to deal with a plunge in tourists this year. Hotels will offer and cross-sell value packages and recognise the importance of the internet.

Mr Brett said that while tourism in the region was poor this year, the industry had been volatile since 9/11 in 2001.

"With many negative factors, the tourism industry has been changing. For example, you will see airline consolidations and alliances to save costs while low-cost carriers and online booking are growing," he said.

"Intra-Asia travel will rise and integrated IT systems and mobile innovations are important things for people and businesses."

Tuesday, May 26, 2009

Bangkok's airport rail link to start services in december

Published on May 25, 2009 

The Airport Rail Link will start running commercially on December 6, charging Bt150 for the through train and Bt15-Bt45 for the stopper, according to distance. 

Transport Ministry deputy permanent secretary Tawalyarat Onsira, who is chairman of the State Railway of Thailand, said the elevated system would link Suvarnabhumi Airport with the City Air Terminal in Bangkok's Makkasan district.

He said construction was 98 per cent complete.

The SRT board urged haste in recruiting staff to operate the system and complete installation of the security system.

The SRT will submit a plan to set up a subsidiary to operate the system to the Cabinet this week.

Tawalyarat said the Cabinet had approved a budget of Bt115 million for improving road access to stations, which was expected to be done quickly except for Makkasan Station's entrances on Rama IX Road and Petchburi Road, for which a consultant would have to be hired.

Monday, May 25, 2009

Global carriers slash thai-bound flights

About 48 flights a week are now out of the schedule amid global downturn

International airlines and freighters have cut 1,536 Thailand-bound flights from their schedules for March to October due to the global economic crisis and the tourism slump, according to the Department of Civil Aviation's Air Transport Regulatory Bureau.

The number of passenger flights for the summer schedule has fallen from 963 per week to 938, while freighter numbers are down from 116 to 93 flights per week, the bureau said.

This means an average of 48 flights per week have disappeared from the schedule.

Chomnong Saraaksorn, director of the bureau, said the global economic slowdown was the key factor in the cancellations, while the Kingdom's political problems had added to the pressure on the carriers. "So far, the total number of international airlines operating in and out of Thailand remains at 90 - the same figure as in March to October last year," Chomnong said.

Pandit Chanapai, executive vice president for commercial operations at Thai Airways International (THAI), said the company had cut 170 domestic and international flights from its May schedule due to slow forward bookings.

"Most of the dropped flights are on regional routes, due to it being the low [tourist] season, as well as the fallout from the H1N1 flu epidemic," Pandit said, referring to the global spread of the disease commonly known as swine flu.

Pandit said additional flights had been cut for the period of June 1-9 as people continue to avoid unnecessary travel for fear of contracting the flu virus.

THAI has seen few new bookings at its office in Los Angeles, where more than 40 infections have been reported.

As a result, the airline decided to postpone adding three more flights from Bangkok to Los Angeles originally scheduled for the month of June until the flu situation is resolved.

THAI currently operates four nonstop flights per week on the route. Singapore Airlines has made the most reductions in both passenger and cargo services, with 13 dropped flights, followed by Russia's Transaero with 10 flights.

Korean Air, Northwest Airlines, Air China, China Eastern, EVA Air and Indian Airlines are each reported to have cut between five and 13 flights.

Five airlines have halted their services to Thailand altogether: Air Mandalay of Burma, Air Seychelles, Best Air, Hainan Airlines and Russia's Vladivostok Air.

Best Air stopped operations due to internal problems, while Air Seychelles is short of aircraft and Vladivostok Air has reported traffic-rights problems.

On the other hand, these reductions have prompted some airlines to introduce, boost or resume flights to Thailand.

These include Tiger Airways, AirAsia, Cebu Pacific Air, Flyflyer (Malaysia), Philippine Airlines, Emirates, Gulf Air, Air Berlin, Blue Panorama (Italy), Edelweiss Air (Switzerland), Hong Kong Air, Je Ju Air (South Korea) and China's Shenzhen Air.

Tiger Airways has added the most flights, boosting its schedule to 35 flights from 21.

According to Chomnong, the number of domestic flights has also decreased, particularly on the Bangkok-Koh Samui and Chiang Mai-Mae Hong Son province routes. Bangkok Airways is cutting flights between Bangkok and Koh Samui, and will halt flights to the island temporarily in the event that passenger numbers decline too far.

According to Pandit, THAI will add only one new route this year, from Bangkok to Oslo, Norway.

He said the carrier's passenger load factor - the percentage of seats filled - was 73 per cent in April, falling short of the projected 75 per cent.

Load factor in May, projected to reach 71 per cent, also fell short at 65 per cent.

However, the airline's average load factor remains at the targeted 76.7 per cent.

"There is a slim chance of recovery in the second half, but second-quarter results could also miss their targets," Pandit said.

Thanachart Securities said THAI's second-quarter earnings could be negative due to the flu outbreak and rising fuel prices. THAI executives insist, however, that annualised performance will improve on an expected recovery in the high season.

THAI's first-quarter net profit was the highest of all Thai listed firms, at Bt7.87 billion.

THAI shares closed at Bt15 |on Friday, down Bt1.20 or 7.41 per cent.

Saturday, May 23, 2009

Aviation industry bracing for hard times as air travel, cargo dips

Kuala Lumpur - The aviation industry needs to continue preparing for difficult times as international passenger volume and demand for air cargo slumped in April, the Association of Asia Pacific Airlines (AAPA) said Thursday. Asia-Pacific airlines carried a total of 11.1 million passengers in April, a drop of 100,000 passengers from the month before and a dip of 5.8 per cent from April 2008.

Air cargo volumes continue to be depressed, registering a drop of 21.9 per cent year-on-year, the statement said.

From January to April, total international air cargo traffic dipped 24 per cent compared to the same period last year, said the association's director-general Andrew Herdman.

"Business conditions for airlines remain extremely difficult," Herdman said.

However, he said there were "tentative" signs that the worst of the crisis may be over, saying the April figures, though low, were less drastic than the first three months of the year.

"Nevertheless, the outlook for the remainder of the year is one of continued challenges," he said.

April's figures continue to reflect a downtrend in demand in air passenger and cargo volume from last year, when AAPA's 17-member airlines recorded 141.5 million passengers, a 1.8-per-cent drop from the year before, and a 6.1-per-cent dip in air cargo.

Friday, May 22, 2009

Airlines crying ‘crisis’

21:28' 21/05/2009 (GMT+7)

VietNamNet Bridge – The economic downturn has made domestic airlines suffer. They have been losing money on domestic air routes, and losing out to foreign airlines on international short-distance routes. Meanwhile, Circular 103 on removing the ceiling airfare, which is thought will ‘untie’ air carriers, has not been promulgated yet.


No new licencing until 2015


Do Duc Tu from the Department for Infrastructure and Urban Centres under the Ministry of Planning and Investment said that the national flag air carrier Vietnam Airlines has had tremendous difficulties since the first quarter of 2009 with the number of passengers down by 3.3 percent. The airline is forecast to obtain the growth rate of only 4.9 percent this year, while the rate was 15.8 percent in 2008.


Jetstar Pacific Airlines (JPA) is maintaining its growth with the number of its passengers increasing significantly by 28.7 percent in Q1. However, the figure is still much lower than the increase of 54.6 percent in 2008.


Indochina Airlines, a private air carrier, which has been operating for the last six months, has had to halve the frequency of its Hanoi-HCM City flights. The air carrier has also cancelled a contract on chartering an additional aircraft; it is now using only one aircraft with 282 seats and offering four flights a day.


Vietjet Air, the first private airline, which was licenced two years ago, has not been brave enough to offer flights yet. The airline’s flight schedule may be delayed until October after two previous delays.


Its operation licence will become invalid if it does not provide flights prior to December 2009.


The Civil Aviation Administration of Vietnam (CAAV) has revealed that it may not licence new airlines until 2015.


No domestic airline, from Vietnam Airlines, VASCO, JPA to Indochina Airlines, has been making profit on domestic routes.


Luong Hoai Nam, General Director of JPA, said that Vietnam’s aviation’s market share for short-distance air routes (less than 3 hours) has been significantly narrowed from 35-40 percent to 15-20 percent due to the dominance of foreign airlines.


There were only three flights a week on the Hanoi-Kuala Lumpur route when Vietnam Airlines was the sole air carrier with the route. The number of flights increased to seven when another airline jumped in, and then doubled to 14 flights a short time later. The same situation has been occurring with flights to Singapore and Thailand.


While foreign airlines have raised the number of flights by many times, Vietnamese airlines have just been maintaining one or two flights a day. The losses from domestic routes have made Vietnamese air carriers hesitant to compete with foreign air carriers for domestic routes, thus they have step by step yielded the way.


A tightened mechanism


Nam said that the current airfare management mechanism also shows shortcomings. Relevant ministries have released Circular 103 on removing the ceiling airfare scheme on domestic flights, but the circular has not been brought to life yet.


Meanwhile, no concrete solutions have been suggested to help airlines escape from crisis. At a workshop to discuss ways to rescue air carriers held in Hanoi yesterday, solutions mentioned there were vague, and aimed principally at helping develop the aviation industry in the long run rather than help it out of its current difficulties.


The workshop was scheduled to take place earlier this year, but it was not organised until yesterday, when the airlines are already in the grip of a crisis.


Ha Yen

Vietnam aviation seminar hel - At a seminar titled “Solutions for Vietnam’s aviation sector to overcome crisis” held yesterday by Thoi Bao Kinh Te Viet Nam and Vietnam Civil Aviation Department, Lai Xuan Thanh-vice head of the department spoke that the country now has five carriers including Vietnam Airlines with 49 planes, Jetstar Pacific with four aircrafts, VietJet Air starting to launch flights with four planes, Indochina Airlines with 2, Mekong Airlines that plans to start flights from 2010 early by two 100-seat planes on a Hanoi-Phu Quoc route.

Additionally, there are extra 43 foreign air firms launching flights from/to Vietnam against 18 companies of 2002.

By 2015, Vietnam’s aviation sector will have about 149 plans with a estimated supply of 35 million passengers a year including 19.5 million international and 15.5 million domestic passengers, he added.

However, compared with Asean countries, Vietnam’s aviation size ranks the sixth before Brunei, Cambodia, Laos and Burma and after Thailand (with estimated 60 million passengers), Malaysia (47 million) and Singapore (40 million).

Despite the advantages of a large population, a narrow and stretched terrain and dense airline network, which are favourable for developing domestic aviation sector, till date only domestic flights on North-South route can bring in profit. Vietnam Airlines as the national carrier still is responsible for carrying out flights for social and economic services.

But as for international routes, both domestic and foreign air firms including leading carriers are entering a very fierce competition. According to Thanh, the biggest difficulty of Vietnam’s aviation is the too heavy dependence on foreign factors, especially human resources and decisive factors for production costs. Factually, Vietnam Airlines has to use 30% of foreign pilots, Jetstar 90% and Indochina Airlines 100%. The country has not had the civil pilot training school so 100% of Vietnamese pilots must be sent to foreign countries for training with a high fee of $130,000 each person.

Moreover, Vietnam still has to rent or buy jet fuel, aircraft accessories and materials from foreigners with the rental accounting for 32-40 percent of finished price. Over 80 percent of aircraft maintenance service must be outsourced.

Meanwhile, Vu Ba Phu-vice chief of Ministry of Industry and Trade’s Competition Management Department proposed, in order to escape from the standstill of the global aviation service, air firms are required to upgrade competitive strength along with the government’s support and effective investment packages.

Thus, air companies should study current policies and laws thoroughly and ask advice of management agencies as implementing competitive strategies on the domestic market.

Quoting Luong Hoai Nam, general director of Jetstar Pacific Airlines, one of the most effective measures to help air firms overcome difficulties is that the state needs to remove the airfare ceiling price mechanism which is beneficial for consumers but these companies are disallowed to hike airfares exceeding the ceiling level just in the peak time when the travelling demand could surge 2-3 times against the normal period. (TBKTVN)

Wednesday, May 20, 2009

Huge fall in Thailand's arrivals due to flu

The number of Chinese and Japanese visitors to Thailand is expected to drop sharply in coming months, due to the spread of the type-A (H1N1) flu virus.

The Thai-Chinese Tourism Association (TCTA) projects that tourist arrivals from China will plunge by 600,000 over the next six months, due to stricter travel requirements imposed by Beijing.

The Thai-Japan Tourist Association (TJTA) said Japanese arrivals would likely fall by about 600,000 in the second half.

The only types of visitors from these countries are individual tourists and businessmen, said the associations.

TJTA president Anake Srichevachart said the Japanese government was also discouraging its citizens from travelling within Japan, due to fears the domestic outbreak, which has currently affected mainly Osaka and Kobe, will spread to other parts of the country.

The official number of people infected with the H1N1 flu virus in Japan rose to 178 yesterday. The authorities reacted by closing more than 4,000 schools, colleges and kindergartens for the rest of the week, to slow the spread.

TJTA members will meet tomorrow to seek remedial measures in the face of the expected sharp fall in Japanese arrivals.

"The situation is now worse than [what happened in the wake of] the rioting here in April as far as Japanese tourist numbers are concerned," said Anake.

TCTA president Sisdivachr Cheewarattanaporn said Thailand's tourism had been immediately affected, as tour firms in China are barred from bringing tourists out of the country. One of the Chinese authorities' new policies in the wake of the H1N1 scare is to encourage domestic travel, which will mean the number of tourists visiting Thailand could show negative growth this year, he said.

"The Chinese government is very serious [about containment]. If a passenger on a plane shows flu symptoms, all the other passengers could be quarantined," said Sisdivachr, adding that if the situation were not resolved soon, the impact on tourism could still be felt a year from now.

The number of Western tourists - mainly from the UK, Germany, Scandinavia, the US and Canada, but also from Eastern Europe - is also expected to drop in the coming months, said Anake.

Both Anake and Sisdivachr said the only thing that could put an end to the fear factor was the World Health Organisation coming up with an effective vaccine and medication to treat this flu strain.

The Associa-tion of Thai Travel Agents recently said the number of international arrivals had drop-ped by 50 per cent year on year in the first four months, due to negative factors like the Bangkok airport closures late in 2008 and the Songkran riots.

The flu outbreak has sparked new fears of global travel. Thailand has seen a 10-per-cent drop in flight frequency this year, due to the flu, the economic crisis and last year's airport closures, said Somchai Thean-anant, president of Aeronautical Radio of Thailand, which provides aviation communications at airports.

The company's revenue has fallen by Bt500 million a month, and its expected full-year income could well be below expenses for the first time. Somchai said if revenue were to match expenses, flight frequency must rise 5 per cent from last year's level.

In a bid to stimulate tourism, the Thai Travel Agents Associa-tion, Amadeus and Krungthai Card will jointly host a travel fair called "Asean+3" in Bangkok from May 28-31.

Tuesday, May 19, 2009

Thailand's air ticket sales dive 20% in value in Q1


Published: 19/05/2009 at 12:00 AM
Newspaper section: Business

Airline ticket sales in Thailand shrank by 20% in value and 10% in volume in the first quarter of this year, reflecting the global downturn in air travel industry.

The value of fares and surcharges on tickets issued in Thailand through the International Air Transport Association's (IATA) billing and settlement plan (BSP) system fell by 19.73% from the same period last year to 12.73 billion baht.

The value of net fares dived 23.39% year-on-year to 7.99 billion baht.

Meanwhile, the numbers of air tickets issued in Thailand through the system dropped 9.65% to 590,684, down from 653,789 year-on-year, according to IATA's Bangkok office.

The BSP system incorporates 388 IATA-accredited sales agents in Thailand, which process and secure fare payment to participating carriers.

These agents are responsible for roughly 80% of all air tickets issued in Thailand. The remaining 20% are sold through airlines' over-the-counter and on-line sales channels.

The steep decline was mainly attributed to global recession, but Thailand's political turmoil has taken its toll.

The outlook for ticket sales in the second quarter continues to look gloomy with consumer confidence deteriorating further because of additional factors, such as the Songkran riots and the (A)H1N1 flu outbreak.

Concerns over a possible (A)H1N1 pandemic would compound the misery for an industry already facing its worst financial crisis in decades.

Air travel demand has been falling globally for months, as businesses cut costs and tourism feels the pinch from the financial crisis.

IATA said global passenger traffic fell 11.1% in March over the same month in 2008, while cargo traffic fell 21.4%.

"Leisure travel will be hard hit and there will be trade-down for necessary business travel to the economy seats," said Chitvee Leelasiri, Thailand country manager for IATA.

It is too early to forecast the outlook for third-quarter ticket sales, he said, though trade is unlikely to pick up.