Friday, September 3, 2010

Abhisit 'fully backs' THAI's new joint venture

Prime Minister Abhisit Vejjajiva said yesterday that the government would not interfere in the establishment of Thai Tiger Airways, a low-cost airline being set up by the national carrier Thai Airways International (THAI) and Singapore's Tiger Airways Holdings.

Thai Tiger Airways is expected to commence operations in the first quarter of 2011.

During a visit to THAI headquarters, Abhisit, Finance Minister Korn Chatikavanij and Transport Minister Sophon Saram confirmed the government's stance in supporting THAI's management, which has spent the past year and four months working hard to bring the airline out of financial doldrums.

Abhisit said that when his government took office, everyone was concerned about THAI's chances of survival. However, the management under Piyasvasti Amranand had managed to pull the carrier out of the crisis.

"Their next challenge will be to maintain this success. THAI is a state enterprise, and though it serves the government, it must also be competitive as a private firm. This makes THAI's work quite complicated," the prime minister said.

He added that the government was ready to provide support and allow THAI's operations become flexible so it can compete with other airlines. Its objective is to become a top airline in Asia, if not the world, and make its low-cost carrier a resounding success as well.

Piyasvasti said the investment in the low-cost airline was in line with the firm's strategy to increase its market share and income.

He explained that the share of low-cost airlines in the domestic market had jumped significantly from just 2 per cent last year to 7 per cent this year. The share of THAI, which had been positioned as a "premium airline" in the domestic market, dropped from 43 per cent to about 33 per cent. THAI's domestic carrier Nok Air is positioned as a budget airline, not a low-cost one, he said.

Thai Tiger Airways, meanwhile, is aimed at serving customers who want to take both domestic and international flights that have routes no longer than four to five hours.

Piyasvasti said THAI's performance was satisfactory and it even made a profit of Bt12.2 billion in the first half of this year despite the political unrest and the volcanic eruption in Iceland.

"In the next five years, THAI plans to invest about Bt150 billion to improve its services and purchase new aircraft, of which Bt50 billion would have to be sought from different sources. We have already borrowed Bt28 billion and are in the process of issuing debentures worth about Bt15 billion," he said.

Sophon said his control of THAI could not be considered interference.

"I want the airline to clarify all details related to the joint venture with Thai Airways for me, so I can answer any questions raised by the Cabinet," the transport minister said. "The management will be able to continue the project without any concerns of political interference. The problem will be over if their explanation of the project is clear."

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