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Established and commenced operations in Feb-2004 and based at Bangkok’s Suvarnabhumi Airport with a secondary hub at Phuket International Airport, Thai AirAsia is a joint venture between Malaysian LCC AirAsia and majority Thailand financial interests. Locally listed company Asia Aviation Public Company Limited (“Asia Aviation”) is the holding company of Thai Air Asia. A low cost airline using fleet of narrow-body Airbus and Boeing aircraft, Thai Air Asia operates a network of domestic and regional services through Thailand and Asia.
Location of Thai AirAsia main hub (Bangkok Suvarnabhumi International Airport)
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider Thai AirAsia fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
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Bangkok Airways is planning relatively ambitious fleet and network expansion over the next year as the independent full-service carrier looks to cement its position in the increasingly competitive Thai market.
The carrier plans to add five A320 family aircraft by the end of 2014 and is close to placing orders for new-generation turboprop and narrowbody aircraft. The fleet renewal and expansion could be partially funded by an initial public offering (IPO), which Bangkok Airways now aims to complete by the end of 2013 following a six-month delay.
The upcoming launch of three new low-cost carriers in Thailand, starting with Thai Lion on 04-Dec-2013, provides a potentially challenging backdrop to an IPO. But Bangkok Airways, which has been profitable for four consecutive years, is confident in the long-term viability of its boutique carrier niche. The carrier’s outlook remains relatively bright, boosted by an expanding portfolio of partnerships which will continue to provide high-yielding passengers that keep it largely out of the crossfire between LCCs.
The Myanmar-Thailand market is experiencing another surge of additional capacity as airlines from both countries continue introducing new flights. There will soon be about 23 daily frequencies between the two countries, up from 14 only a couple of months ago and eight from mid-2012.
So far the demand has not kept up with supply, resulting in unsustainably low load factors. The intense competition also has led to a reduction in yields.
But the market could get a reprieve as Myanmar and Thailand prepare to lift visa requirements. By the end of 2013 Thailand is expected to become one of the first visa-free countries for Myanmar. This should unleash a new wave of passenger growth although for at least the short term the market seems set to continue to suffer from over-capacity.
AirAsia X’s new affiliate in Thailand is gearing up to launch services in early 2014 with an initial fleet of two A330-300s and an initial network of three destinations. At least one destination in Australia and North Asia is expected to be served from a base at Bangkok’s Don Muang Airport.
Thai AirAsia X (TAAX) is one of three new low-cost carriers in Thailand but is strategically well positioned as it will be the country’s first medium/long-haul LCC. It will also have the advantage of being on the receiving end of Thailand’s largest short-haul LCC, Thai AirAsia.
TAAX will be the first of potentially several new joint venture carriers from Malaysia-based AirAsia X, which is using proceeds from a Jun-2013 IPO to accelerate expansion in line with a new multi-hub strategy. Indonesia is in line to host the second AirAsia X affiliate, potentially launching by the end of 2014 with a base in Bali. The Philippines for now is not being considered for an AirAsia X affiliate, although it remains a long-term possibility.
Indonesia’s Lion Air Group is aiming to launch a new affiliate in Thailand by the end of 2013 with an initial fleet of two 737-900ERs based at Bangkok Don Mueang Airport. The new carrier, Thai Lion, will follow the low-cost model and, unlike Lion’s Malaysian subsidiary Malindo, provide an all-economy no-frill service.
Thai Lion will initially serve two international routes – Kuala Lumpur and Jakarta – and Thailand’s second largest domestic route, Bangkok-Chiang Mai. With Kuala Lumpur and Jakarta, Thai Lion will be able to leverage the hubs of its sister carriers.
The new carrier will compete primarily against Thailand’s two existing LCCs, Thai AirAsia and Thai Airways' low-cost affiliate Nok Air. Both are based at Don Mueang and serve Chiang Mai while AirAsia is the market leader between Bangkok and Kuala Lumpur and also serves Bangkok-Jakarta.
Singapore is seeing another surge in low-cost carrier capacity, led by aggressive expansion from Tigerair. LCC groups Jetstar and AirAsia are also continuing to expand in Singapore but more modestly than Tiger.
Tigerair, Jetstar and AirAsia had equal shares of the Singapore market back in 2010. But Tigerair has since grown faster and will widen the gap from its rivals as it adds five more A320s in the current fiscal year. Tigerair will account for almost 11% of total capacity at Singapore Changi by the end of 2013 compared to just under 8% for AirAsia and Jetstar.
LCCs already account for a little over 30% of seats at Singapore – an impressive figure given Changi’s LCC penetration rate was virtually zero a decade ago and its lack of a domestic market. Tigerair’s forthcoming expansion will drive up the LCC penetration further, to about 32%, but it comes with risks as Singapore’s short-haul market could return to the over-capacity situation seen two years ago.
Southeast Asia continues to experience rapid LCC expansion even though some key markets are approaching saturation. The region’s LCC fleet is poised to grow by about 20% in 2013, approaching 500 aircraft at year-end. With some of the largest airline orders in recent years coming from ASEAN-focused LCC groups, rapid growth for the sector is assured for the medium to long term.
The LCC penetration rate within Southeast Asia is now above 50%, having steadily increased over the last 10 years from less than 5% in 2003. Even in the intra-Southeast Asia international market, which is about one-third the size of the region’s domestic market, LCCs now account for 50% of total seat capacity – a remarkable figure given that ASEAN has not yet moved to a single market concept like the EU.
Opportunities still remain for LCC market share gains in some countries, particularly Myanmar and Vietnam. These important pioneer markets have the lowest LCC penetration rates among the seven main ASEAN countries but LCC start-ups from both countries are expanding rapidly.
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