Thai AirAsia undaunted despite rise in competitors

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The two foreign airlines are working with local partners to set up Thai Lion Air and Thai VietJetAir, with an eye to grabbing a slice of the growing domestic pie, fuelled by the tourism boom.

Tassapon Bijleveld, CEO of Thai AirAsia, said yesterday that newcomers would find the market is getting tougher because good time slots have all been allocated.

His airline offers “the most economical airfare” to passengers. No other players can give such a price, he said.

VietJetAir said yesterday that it was forming a 49:51 joint venture called Thai VietJetAir with local airline Kan Air, operated by Kannithi Aviation Co.

Kan Air was established in 2010 with registered capital of Bt200 million by Capt Sompong Sooksanguan. It operates flights from Chiang Mai to Pai, Mae Hong Son, Nan and Phitsanulok. It is building its own airport on Pha-ngan Island as a base to launch services to other resort destination such as Hua Hin, Don Mueang and Phuket.

VietJetAir was founded two years ago. It is expanding fast to cash in on the opening of the ASEAN Economic Community by linking up with local investors in each market. By year-end, it will have 10 aircraft in its fleet, mainly the Airbus A320 model. It connects Hanoi and Ho Chi Minh City to Bangkok with seven round trips per week.

Luu Duc Khanh, managing director of VietJet, said Thailand was chosen as the first country in the airline’s network expansion, thanks to its vast business potential. Myanmar is next.

The company has not yet decided on ticket fares for the new airline here, but pricing to help compete with rivals was not on the radar screen. Instead, the airline aims to offer value via friendly and punctual service along with fun to Thai passengers.

The new airline will launch scheduled flights by the end of this year or early next year from Suvarnabhumi Airport to Phuket, Chiang Mai and Hat Yai, as well as charter flights to China.

Transport Minister Chatchart Sittipan said the move underscored Thailand’s positioning as a hub for regional low-cost carriers. However, VietJetAir chose Suvarnabhumi as its base, not Don Mueang, due largely to better flight connectivity to other regions for its passengers.

He insisted that Don Mueang has provided incentives equally to all players as part of the government’s policy to promote the second Bangkok airport as a hub for low-cost carriers.

The aviation business would face fiercer competition, fanned by the arrival of Lion Air this year. Budget carriers would definitely outgrow full-service airlines. The segment has grown rapidly from 5 per cent to 51 per cent of the total. Thai Airways International Plc, the flag carrier, will have to revise its strategy to cope with the changing business environment, he added.

Tassapon said AirAsia would inaugurate flights to three cities from Bangkok in the rest of this year – Nay Pyi Daw in Myanmar and two in China.

Also, long-haul budget carrier AirAsia X will be launched under a new company. Now, it is in the process of registering for an aviation operating licence from the Civil Aviation Department.

It will get off the ground by the end of this year or the first quarter of next year.



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