Nok Air and Thai AirAsia profits fall in 1Q but continue rapid growth in response to new competition

Nok Air and Thai AirAsia remained profitable and were able to continue their rapid growth trajectory in 1Q2014 despite difficult market conditions in Thailand. But both low-cost carriers have been impacted by the ongoing civil unrest in Bangkok and intensifying competition as profits dropped significantly.

The Dec-2013 launch of Thai Lion Air and the upcoming launch of Thai VietJet will result in four LCCs competing in a domestic market which continues to grow rapidly but is suffering from over-capacity. With their 10-year head starts, Nok and Thai AirAsia enjoy an important first mover advantage and their continued relatively strong financial performance even in the most challenging of conditions shows they have the muscle to withstand any prolonged battle.

Meanwhile competition between Nok and AirAsia is increasing as both groups launch Bangkok-based long-haul low-cost affiliates. Their establishment of widebody operations well as Thai AirAsia's expected expansion into the regional sector, where Nok already plays, results in an interesting dynamic.