Nok Air, Thai AirAsia report growth in 1Q profits as Bangkok’s LCC penetration rate reaches 36%
Thailand's two largest short-haul low-cost carriers, Nok Air and Thai AirAsia (TAA), reported improvements in their profitability in 1Q2015 as market conditions improved. LCC passenger traffic in the Bangkok market surged 41% in 1Q2015 as Nok, Thai AirAsia and Thai Lion all pursued rapid expansion, particularly domestically. LCCs now account for 36% of passenger traffic in Bangkok (both airports) compared to 28% two years ago.
Total domestic traffic in the Bangkok market was up 25% in 1Q2015, driven by a 45% increase by the LCCs. But domestic yields remain under pressure and overcapacity concerns are unlikely to ease given the continued rapid capacity expansion by all three of Thailand's LCCs along with the planned launch of Thai VietJet.
Thailand's short-haul international market is seeing a healthier demand-supply balance as demand has quickly recovered after a challenging 2014. A surge in visitor numbers from other Asian countries has particularly benefitted AirAsia, which is the largest player in Thailand's international LCC market by a wide margin. TAA profits increased nearly four-fold as TAA has a balanced domestic/international network while Nok's profits grew more modestly on a very low base as it relies almost entirely on the more challenging domestic market.
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