Monday, August 30, 2010

Tiger Airways expected to be a roaring success

Thai Airways International president Piyasvasti Amranand, right, tells The Nation's |Achara Deboonme the |reasons why THAI picked |Tiger Airways as the partner for its low-cost airline joint venture. He is confident that the investment will bear fruit and help strengthen the national carrier's domestic and regional presence.

Why partner with Tiger Airways?

Regionally, we looked at Jetstar Airways, Dragonair, Cebu Pacific, Lion Air and Tiger Airways. While the first two are not quite active in this region, Cebu and Lion are not quite strong. Tiger is the financially strongest, after the listing on the Singapore exchange. We also share the same business concept and have the same enemy. THAI and Singapore Alliance, as members of Star Alliance, are good friends.

In the premium market, airlines like Etihad are our enemies. In the low-cost segment, our enemy is AirAsia. We started the discussion late in June and we saw the business synergy.

What's the business plan? How confident are you of success?

Tiger Airways at first proposed only regional routes, but we added the domestic routes as many have been dominated [by Thai AirAsia]. The actual business plan is now being revised, pending approval by the board of ThaiTiger Airways. All this is done without Singapore Airlines' input. As I said, TTA will not be a threat to either Singapore Airlines or THAI.

We're recruiting a Thai CEO, as all 32 crew members and pilots will be Thais.

I'm confident of success. Singapore Airlines saw its holding in Tiger rise from S$8 million (Bt185 million) to S$290 million after the listing. THAI's share price also rose after the partnership announcement.

This reflects public perception.

Low-cost airlines' opportunities are huge. The market expands rapidly as there are a huge number of people who have never boarded a plane - probably 90 per cent of the population in many countries like China and India. In Thailand, 50 million have never flown. [Thai AirAsia now opens booking for flying until August next year].

Is the Bt200 million capital sufficient for the operations?

Under the MoU, it is open for the registered capital to be increased to Bt900 million. Beyond that, it needs the board's consent.

It's enough, as we are leasing all the 10 aircraft. Under the MoU, we will lease some aircraft from Tiger, which should be delivered some time before operations start in March. Still, we can opt for other companies if they offer lower prices.

It's necessary that the low-cost airline must be operated with new aircraft, for energy efficiency. The average age of AirAsia and Ryan Air's fleet is three years.

We can finance the leases with the capital as well as advance booking.

What's your argument on losing aviation slots to a Singaporean airline?

The sky is open. If we don't do this, others will. There is no advantage or disadvantage.

What's the future of Nok Air?

In Singapore, there are three layers - Singapore Airlines for the premium market, Silk Air for the budget level and Tiger Airways for the low-cost segment.

Ours will be the same. Patee [Sarasin, CEO of Nok Air] and I have been on a friendly course. THAI can't operate the low-cost airline on its own due to the different business culture.

Meanwhile, Nok Air could not be changed, given the shareholding complications.

Though the largest shareholder in Nok Air, our share is only 39 per cent.

We're negotiating to buy 10 per cent more from Krung Thai Bank, but the price is not concluded yet.

By the way, we can't just sell off our shares, for fear that it could give way to the competitor.

Will you lose face if the new project fails?

It will never fail. The market opportunities are huge. And it involves such a tiny investment, only Bt100 million from THAI. [He simply nodded when asked if there was a plan to list TTA on the bourse.]

As you have been in office for nearly a year, what's your self-evaluation?

Forty per cent of the key performance indicators concerns the financial performance, 20 per cent on ability to accomplish business plans and 20 per cent on satisfaction and ratings.

On finances, so far so good. On business-plan accomplishment, I have achieved more than cited in the business plan.

No comments: