Wednesday, August 18, 2010

THAI mulls regional airline

National carrier Thai Airways International is considering setting up a "regional airline" service to capture a share of the increasing number of passengers in this part of the world.
The company's board of directors recently sought approval from its executive board to conduct a feasibility study of such an operation.

The idea is not only to attract new customers but also to facilitate THAI's desire to become a fully integrated airline.

The plan has been submitted separately from the recent approval to set up Thai Tiger Airways, a joint venture between the company and Singapore-based budget airline Tiger Air.

A THAI source said the market still had room for further access and the carrier therefore needed to revise its strategy to accommodate such an opportunity.

"We foresee the launch of a multibrand strategy to capture a share of regional travellers, both businesspeople and tourists, to secondary markets in the region such as Indochina, South China and India," said the source, noting that they were important markets in support of THAI's international routes.

The large size of THAI's aircraft and high operating costs make it inconvenient to fly to every destination in the region. As a result, the company has to look at a more manageable plan and think more of business expansion to short-haul routes and secondary markets in the area, said the source.

"This has prompted the company to think of a full-service regional airline."

Under the plan, the company is considering small-body aircraft with 150-180 seats, focusing on economy and business classes. In addition, the entire fleet would use the same model to ensure efficient operation and sustainable costs.

The source said the idea would not hit THAI's own operations, as the regional airline would not fly on the same routes but would focus on secondary markets where there was no overcrowding.

If approved, the new carrier would open new routes such as Siem Reap, Guilin and Mandalay, besides facilitating connecting flights of THAI.

The regional airline would focus on routes entailing no more than six hours of flying time, and the national carrier's management would also allow the company to implement code sharing on ticket booking and frequent-flyer benefits.

However, Transport Minister Sophon Saram yesterday said he had not heard anything from THAI management about the idea for a regional airline.

"I don't understand the objective. The company could expand its market by seeking suitable new aircraft to facilitate the operation," he said.

The minister added that the establishment of Thai Tiger Air also had been designed to handle regional flights.

A source on THAI's executive board said the regional-airline idea had been taken off the company's agenda, as it already had an integrated service from its premium (THAI), regional (Nok Air) and budget (Thai Tiger Airways) services.

Meanwhile, THAI has opted for a public offering of up to 1 billion shares, the company said in a statement yesterday.

The bulk of the shares will be allocated to the Finance Ministry, which seeks to maintain its 51.03-per-cent stake, and to other existing shareholders.

The offer ratio will be announced on the day it reveals the offering price, as determined by the book-building method.

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