Thai Tiger to go toe-to-toe with AirAsia
Soon to be a much more familiar sight in Phuket? A Tiger Airways Airbus A320-200.
There can be little doubt that AirAsia has had an effect on the bottom line at Thai Airways International, offering discounts that the Thai flag carrier has not even tried to match.
Thai did try to claw back some of the revenue that was heading for AirAsia through its involvement in Nok Air, in which it has a 39% stake.
But this, apparently, is not enough. Nok Air has not been exactly a roaring success; it did make forays into India and Vietnam but has since pulled back to concentrate entirely on the domestic market, flying from Bangkok to 13 destinations in Thailand.
Thai’s president, Piyasvasti Amranand, laid out the problem plainly. “Our market share used to be 82%. But as air travel [has grown] our share has diminished. Even with Nok Air, together our market share is now 50%,” he said.
Nok is a great deal smaller than Thai AirAsia; it has just five aircraft compared with Thai AirAsia’s 18.
But now Thai has pencilled a deal with Singapore’s Tiger Airways to create a new airline, Thai Tiger Airways, to go head-to-head with AirAsia.
Hard times make for strange bedfellows. Tiger’s biggest shareholder is Singapore Airlines, Thai’s biggest rival in the region (yes, they are both members of the Star Alliance but there is no code sharing between the two, which says something about their relationship).
The important element, however, is the involvement in Tiger of RyanAsia Ltd, the regional offshoot of the highly successful European low cost carrier (LCC) RyanAir, which now carries more international passenger than any other airline in the world.
Tiger is also no stranger to Thailand. It has been flying to Phuket for six years, and also serves Udon Thani and has, from time to time, flown into Krabi and Haad Yai.
A memorandum of understanding, which foresees Thai and Tiger establishing the new joint-venture airline was signed on August 2.
The announcement of the signing, with the partners planning to have the new LCC off the ground early next year, ruffled not a few feathers in Bangkok. The Thai Ministry of Finance is Thai’s biggest shareholder, with 43%, followed by the government’s Vayapuk Fund with 15.5% and the Government Savings Bank with 11% – for a total of just under 70% government ownership.
Transport Minister Sophon Saram harrumphed that things were moving far too fast. While he said that his ministry would do nothing that might be seen as interference in the airline’s decision-making, he warned that if the proposed new airline fails, Thai executives “must take full responsibility”.
So far there is no sign that Thai execs plan to back away. Piyasvasti rushed around the day after the MOU signing, visiting Sophon, Finance Minister Korn Chatikavanij, power broker Newin Chidchob and Deputy PM Suthep Thaugsuban to “clarify” the need for the new airline.
So far, thing still seem to be on track, with the new airline to be owned 51% by Thai and 49% by Tiger.
If and when it does get off the ground, expect to see the lucratively busy Bangkok-Phuket route becoming one of the main battlegrounds between Thai Tiger and AirAsia. That’s got to be good for passengers’ wallets.
[...] of AirAsia an Nok execs, who were probably counting on a bit of a breather before the launch of Thai Tiger, THAI’s budget airline JV with Tiger of Singapore. That’s due to take off – yes, [...]