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Thai Airways gives in-principle approval to establish LCC

23-May-2011 10:24 AM

Thai Airways International approved in principle a plan to establish a new LCC, tentatively known as Thai Wings, to operate on routes with a flying radius of two to three hours. Its plan to establish an LCC joint venture with Tiger Airways Holdings Ltd recently ran into regulatory issues whereby THAI sought approval from the Ministry of Transport to invest USD3.3 million in the joint venture. It signed an agreement to form Thai Tiger Airways with Singapore's Tiger Airways in Feb-2011, but has yet to receive government approval. The national carrier's sub-brand budget carrier, is expected to commence operation in Mar-2012 or Apr-2012. Separately, the board has also agreed to extend by two months the agreement with Tiger Airways to establish the Thai Tiger joint venture, due to expire at the end of May-2011. Chairman Ampon Kittiampon stated the company expects to achieve a 70-80% load factor and break even within the first year of operation. He added that Nok Air, THAI's low-cost subsidiary, would continue services. THAI president Piyasvasti Amrannand will head the unit and a new management will take over later.

Thai Airways: "The new airline will be set up as a new business unit under Thai Airways. We can proceed right away without any need to seek approval from the Ministry of Transport. Whether or not Thai Tiger could be established, we are going ahead with this new airline anyway. The planned budget carrier is expected to start with seven aircraft, five of which will be leased from Thai Airways' existing B737s that currently serve domestic routes, while the other two will be leased from external sources. The fleet of the new unit is targetted to expand to 11 narrowbody planes within three years." Chairman, Ampon Kittiampon. Source: The Nation, 21-May-2011.

Thai Airways: "The regional airline is intended to operate under a high efficiency, with flexible and effective management. Establishment of a regional airline is in accordance with the outcome from the Nov-2010 Board Workshop, when the company’s corporate strategies for 2011-2017 were developed. While the regional airline will be a full-service airline, with customers continuing to receive the same benefits such as baggage weight allowance and mileage accrual as they do on THAI, differences in offerings will be available for customer to choose from. The regional airline, with a newer image and price differentiation, will operate more frequencies with 11 narrow body aircraft to short-haul routes that feed into other routes in the intra-region." Source: Company Statement, 20-May-2011.