Thursday, August 5, 2010

Thai AirAsia braces to fend off new rival

Thai AirAsia, the country's largest low-cost airline, is formulating strategies to tackle the threat from newly announced budget carrier Thai Tiger Airways, chief executive officer Tassapon Bijleveld said yesterday.

Within the next year, Thai AirAsia will increase the number of daily flights in and out of Thailand from 140 to 172. The airline will also receive four new Airbuses this year to increase its capacity, and plans to add more destinations, mostly overseas - including China.

It will also create more marketing strategies along with increased frequency in its promotions in order attract more customers.

Moreover, the airline will seek more alliances with banks, hotels, entertainment firms and service operators so that it can offer more varied packages to customers at low prices.

"Thai AirAsia will not let any single percentage point of market share go to a new rival," said Tassapon. Currently, Thai AirAsia has 30-40 per cent of the domestic market. The airline is aiming for 6.2 million passengers this year and a profit of Bt1.2 billion. It targets earnings of Bt1.5 billion next year.

Tassapon said the low-cost airline business in Thailand would face a price war when Thai Tiger Airways starts up operations in March next year.

He said the newcomer would shake up the other two local carriers, Nok Air and One-Two-Go. However, Thai AirAsia is confident about retaining its market leadership in Thailand.

Meanwhile, Tassapon yesterday announced an expansion of his own business, in which he is involved in a joint venture with members of the Carabao band, via the opening of two musical-instrument stores at The Mall Bang Kapi and The Mall Bang Khae. Carabao Musical imports guitars from China for sale here under the Carabao Guitar brand. Amplifiers are also on sale.

The company is aiming for a profit of Bt100 million over the next one to two years, a sharp rise from the Bt1 million expected this year. Returning to aviation matters, Finance Minister Korn Chatikavanij yesterday said he had no objection to Thai Airways International's (THAI) decision to form Thai Tiger Airways in a joint venture with Singapore's Tiger Airways.

He said it was fully within the board's powers to make such a move. Korn said executives of the national carrier had previously discussed with him their plan to form a new low-cost airline in order to compete with existing budget carriers on international routes.

Nok Air, a unit of THAI, will still provide services on domestic routes, he added. DBS Vickers Securities (Thailand) supported THAI's move, saying there would be no cannibalisation as Nok Air would continue to serve only domestics routes while Thai Tiger Airways would focus more on regional routes, both in existing markets with strong demand and in new markets where it is feasible for a low-cost carrier to operate.

The venture will help THAI to expand its network, tap into a new customer segment and exploit escalating demand for budget travels, as well as protect its market share against other low-cost carriers, said DBS.

The securities house urged investors to continue buying THAI shares, thanks to the strong rebound in operations since the April-May political protest. DBS maintains its forecast that THAI's share price could rise to Bt44.25, excluding the new JV's contribution as this was pending further details.

1 comment:

宛淑芳真 said...