CEO interview with Bangkok Airways, President & CEO

Transcript

Speaker 1:

Sorry. Hello and welcome to this session of Cap Alive. Today I have the distinct pleasure of talking to

Captain Puttipong Prasarttong

-

Osoth, who is president and CEO of Bangkok airways. We'll be discussing

the market situation in Thailand and what this mea

ns for his airline. Welcome Captain Puttipong and

thanks for joining us.

Captain Puttipong:

Yeah. Hello.

Speaker 1:

Right. I thought first up we could talk about the international tourist area. Tourism is obviously very

important to Thailand. Would you be

able to just talk a little bit about how the lack of tourism is hurting

the economy, particularly the travel industry in Thailand?

Captain Puttipong:

Okay. Let me bring the picture like this. We used to have 40 million tourists to come to Thailand. That

wo

uld before the COVID, I would say, and once after COVID normally an international flight with

suspend and on some particular airlines do fly, but very little, so the number of tourists reduced

dramatically down, I would say probably to be maybe 10% of what

it used to be or less. But for domestic

flight, we still can do in some particular period that's up to the airline. We still can have domestic

passengers who are native Thai people or maybe expat who live in Thailand, travelling around, but not

that much

anyway, because some of the area would restricted. Basically the tourist market, of course, is

very important to Thailand. It cost at least about one fifth of the GDP of Thailand and one is gone. I think

it for Thailand itself, we lost a lot of those oppor

tunities.

Speaker 1:

Right, right. Of course it's that the Thai market is very important to the region as well, because it's one of

the leading destinations for the Southeast Asia and Asia Pacific, I guess. How many routes or flights are

you actually opera

ting right now versus pre COVID?

Captain Puttipong:

Now we still have, we do a lot, according to some of the restriction itself in Thailand, we would have

only six or seven routes left now. That's some of our metro routing is Bangkok to Samui, which is, we

just reopened today actually. We have Bangkok to Chiang Mai, Bangkok to Phuket, Bangkok to Lampar,

Bangkok to Kho Tao and Samui to Phuket, and also to Singapore.

Speaker 1:

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Related to those routes, Thailand has a very interesting initiative for a phased r

eopening of flights to the

tourist areas. I wonder if you could just talk a bit about that what's known as the Sandbox arrangement

and how important that is to the recovery of tourism in Thailand?

Captain Puttipong:

Yeah. I think since we are what we say a

risk to the world, I would say, everywhere. People stopped

flying and once we want, Thailand and the government want to regain the confidence for tourists that

would come. We thought that by the proper preparation we can bring in some of the tourists with

the

confidence of those who would like to come to Thailand and also to hopefully that we can gradually

restart the tourism again. The government of Thailand chose Phuket and Samui to be the starting model,

what they call Phuket Sandbox and Samui plus whic

h they put some restriction for the tourists who

would come. Other requirement, you need to have a vaccination and also the certificate of travel and

also some other requirement, which is if you can meet those requirement and you can travel to Phuket

with

the restriction of staying in the Phuket island area for 14 days.

Captain Puttipong:

Then after 14 days, you can go anywhere. That would be, I think, the

open up, the trial for tourists to

start coming, because I think to get, there's a limited, it's an island, so it might be easy to control and to

make sure that everything can be under control, even though that site had some infected number, if it

arise t

hey can have enough medical personnel or hospital or any facilities to take care of. So far it went

quite well in my point of view, they accommodate around 15,000 tourists a month, in July, because we

just start in July.

Speaker 1:

But that's for the Phuke

t arrangement?

Captain Puttipong:

Yeah, for Phuket arrangement. I think if it works well, hopefully they can bring in more passengers and

want to stay over 14 days, they can travel to any other place in Thailand. That would be, I think, that the

idea of br

inging back the confidence of tourists to come to Thailand and also we can start our business

again.

Speaker 1:

What are the next phases of that programme? Is it still on track or has it been thrown off a little bit by

some of the subsequent waves of the p

andemic?

Captain Puttipong:

I think it still be on track. But the numbers might be effect by some of the, I would say, hiccup since

sometime they put up the more restriction for this period of time, but not mean that they will stop, or

they will cancel the

programme. But anyway, let's see if it can be keep moving. The Phuket Sandbox is

still can be, I think, the future project for Thailand.

Speaker 1:

Yeah. Okay. Right. This will lead to the gradual reopening of most of Thailand, will it? I think even

Bangk

ok is one of the later phases, is that correct?

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Captain Puttipong:

Yes. That is because now after Phuket and Samui they start to have, instead of saying 14 days only in

Phuket, you can split seven days in Phuket and another seven days in the particular are

a in Samui, or the

area nearby Phuket, like in Phangan or Krabi, which is Krabi, it means it's a PPI lab, which is you might

heard about. Also, Phangan area, which is Khao Lak, which is famous for European. For Samui area, you

can go to Phang

-

nga, another

island, which is another smaller island. Those are what we call a seven

plus seven. Then hopefully that if this model can be work out well, it might be extend to the other area,

like Chiang Mai, or Pattaya or Bangkok itself.

Speaker 1:

For Bangkok airways,

what does the Sandbox arrangement mean in terms of new flights you can resume

or new routes you can resume?

Captain Puttipong:

I think what we need to do is to regain the confidence of tourists who want to travel, and also we need

to do those kind of Sand

box. I think it gradually coming up and I think that it would be good for Bangkok

airways ourself, since we can operate some of those flight, what we call the Silk route to have a

passenger coming through Suvarnbhumi airport from the international airlines

coming in, and then we

carry those passengers direct to Samui. This practise, I think, we start by from Bangkok and also we start

in from Singapore.

Captain Puttipong:

This might be some future route, which we can search, or we can explore some place or s

ome other

destination new to come to Samui or maybe, because, I think, in the future the travelling model of

people might be change or might be need to adopt something from what have been effect and what

needs to be, I would say, the next move. You have to

be travel on some restriction, which is I think, that

it may still be around like how you can pass or do the connecting flight or how you can carry passengers,

those kinds of things. Maybe the gateway, it might be change for Asia or Europe who come to Asi

a or

whatever. I think that might still be that something that we need to see and move on.

Speaker 1:

You touched on this briefly earlier, but what has demand been like in the early stages of the Sandbox

arrangement? Has it been as you'd expect or has it

been slow to take off?

Captain Puttipong:

You mean in Phuket?

Speaker 1:

Sorry. Yes. In terms of the tourist demand to take advantage of the Sandbox arrangement.

Captain Puttipong:

Yeah. I think it growing actually from time to time since July, and expect

for August, we can have a

greater numbers. I think for Phuket itself, it just only some period of time that the province itself, they

might be cautious on the numbers and they asked to restrict the domestic flight somewhere somehow,

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which might affect to t

he period of time that we cannot perform the flight, but on the land, you still can

do, but that's only some small period of time that it can be much effect on the process.

Speaker 1:

I was going to ask about the domestic situation because it's separate

from the Sandbox flight, isn't it?

What are the restrictions on domestic flights at the moment and what are the prospects for being able

to resume more domestic services?

Captain Puttipong:

For domestic flight we just been restricted from August, which as

I mentioned for the high infected area

provinces. They asked that we have to stop the flight, and just for this month, it can be a little bit more

relaxed by allowing the domestic flight to be performed under the requirement, or restricted process. A

passe

nger, who want to travel, you need to be a proof of vaccines. You have what you call the proof of

testing. You need to get some kind of epi

-

care or RT

-

PCR tests before less than 72 hours before the

flight, those kinds of things. All the airlines can start

resuming that the flight in domestic and some other

airlines, they start, all the airline, it will start this month.

Speaker 1:

How quickly do you think domestic demand will come back once flights resume?

Captain Puttipong:

I think it might be gradually, m

aybe not that quick because to gain the confidence of people who travel.

But anyway, I think people who fly, the number is a lot less than people who travel on land. If we think

the numbers can be resume, I think it might be it might take not many months,

but probably a month or

around, which, because some days they will think that, okay, you have to be on the bus 10 hour to

Phuket, instead of flying only one hour to Phuket, which is, I mean, compare for the risks and compare

for all the other annoyance, wh

ich is, I think people, we know that flying is a lot safer.

Captain Puttipong:

It's more safe than land anyway and the number of people who travel because we can fly under

restriction, limit the number of passenger also. Basically we can carry now 50% of t

he load at the

moment, but hopefully that it can be release more in term of, we used to be last year, that once we

start to fly and then we resume last year, start by 50% and then gradually up to 70 and then up to

almost full. That was before the second wa

ve or the third wave in Thailand.

Speaker 1:

Before the pandemic, the LCCs were very dominant in the Thailand market, mainly domestically, but

also internationally. How difficult was it to compete with the LCCs in that regard?

Captain Puttipong:

You mean f

rom now on?

Speaker 1:

From just the way the market was before the pandemic, I guess.

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Captain Puttipong:

I think what we try to do is to differentiate from LCC because we always say that we are good airline. We

have services. We have other lounge access fo

r passengers, our co

-

chair partners who would do the co

-

chair air flight with us, I think 30 or 40 partners and all the destination that we choose have to be, how

would I say, special everywhere, but where we fly to in the region, to Cambodia, Luang, Myanm

ar,

Vietnam. Those are the area that we used to be good and then not much on the LCC flight in the region.

Captain Puttipong:

But they consider in the domestic, of course, that still have what we call a price.... I will try not to say a

price war, but the

price competitiveness which is still on, even though for the LCC, but we try to

differentiate ourselves from them. But unfortunately the area is not that wide, so more or less some fly

that we had to fly with them, like Bangkok, Chiang Mai, Bangkok Phuket

Bangkok. But anyway, those

flight that we need to consider other price also that maybe are not as much different from them. We

have to make some price competitiveness.

Speaker 1:

What about after the pandemic? Do you think that the LCCs will be even strong

er in that market and will

you have to change your strategy at all in the post pandemic period?

Captain Puttipong:

I think they would come back probably the same way what they used to be, but for us, we may have to

adopt some of probably the price or while

we might have to look for some other destination, which can

be interesting in the future, like what we used to do to Sam Nuea or to Luang Prabang or to some other

places, which, that is somewhere somehow that we might have to adopt that strategy, like som

e routing

which is very high competition. You may have to see where we want to put ourselves in term of pricing

in some other added designation, which can be consider is good. Maybe we might have to look for some

other places.

Speaker 1:

Just turning to yo

ur fleet for a few minutes. How many aircraft do you have operational now versus

parked?

Captain Puttipong:

Total aircraft we have now it's 39 aircraft but what we using now is around eight, which perform the

other route that I have mentioned before, that

to some way to Chiang Mai, to Phuket, to Kho Phangan

to Phnom Ponh and Phuket, Samui, Singapore.

Speaker 1:

Right.Okay. Which types are you mainly using right now?

Captain Puttipong:

Mainly we use ATR 72, which is according to the number of passengers, not

that many and majority we

use ATR. Apparently that because of the very economic aircraft and since we have about a 50% load or

60% load, it can still survive. That's only some particular route, like Samui and to Singapore that we use

Airbus.

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Speaker 1:

Ri

ght. For the parked aircraft, will they all... Is the plan to return them all to service or might some of

those be retired early?

Captain Puttipong:

Some will be retired as of the sum of those, there'll be on the lease. Once the lease term was over, we

ret

urn the aircraft and those would be for on year 2022, 2023. We have to look for the designation and

the routing that we resume the flight also after the COVID pandemic over, or maybe start declining or

we gradually add back on the route that we fly, somewh

ere somehow in the region. If it's now nobody

do those flights and some of the aircraft that we have with it would be a resume to be used, but some

would be a return.

Speaker 1:

Right. Some might be retired before they return to service?

Captain Puttipong:

Yes. Actually we have one aircraft which is going to be a return this year. That would be before we bring

them back to service.

Speaker 1:

So the fleet may be a little bit smaller when you come out of the pandemic period?

Captain Puttipong:

That what we s

ee in the near future, like next year and probably the year after, that the fleet might be a

smaller.

Speaker 1:

Are you going to have to look at any aircraft orders over the next two to three years, do you think?

Captain Puttipong:

Not in the plan at the

moment, since what we do, one to have to wait and see what would be the effect,

after we say that the COVID

-

19 was over, how long would it last. Those might have to be a wait and see

how would it be, and also the impact of the spread out of the COVID itsel

f.

Speaker 1:

Right. Okay. I know at one point there was some thought that you might be interested in adding some

wide bodies. Do you think that might be something you'd be interested again in the future, adding some

wide bodies for maybe some longer haul

flights?

Captain Puttipong:

That was not in our plan. I think we still enjoy working with partners and doing a co

-

chair business with

all the other wide body friend, who fly in from Europe or other places in Asia. I think we enjoy doing

where we think that

we a strong, in the region and in the domestic, better work with friend and not to

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perform over, or maybe it might be a chance, but we still have to wait and see. But I think if not in the

near future, that we'll go for that.

Speaker 1:

Right. Okay. One o

ther thing I should raise is that the topic of capital over sustainability. Does Bangkok

airways have any sort of sustainability initiatives underway or have you done, just leading into COVID,

do you have any initiatives underway in that area?

Captain Putt

ipong:

Of course the airline something somewhere where we still have to make goals, but on the other, I would

say a project, which is maybe our diversification that you might heard that we have won the

conversation in the U

-

Tapao airport. We just received

the award from government of Thailand to

manage the U

-

Tapao airport, make it to be the third Bangkok airport, which is to accommodate

international, regional flight, and also domestic, which expect to come up in, I think, in around, in the

next four years.

Speaker 1:

Yeah.

Captain Puttipong:

Which that might be another, the area of, I think, since we own three airport in Thailand. To more or

less work with, how to manage the airport, while we do have knowledge. I think this would be our new...

I think it

can be a new revenue stream and the project is quite big, I would say, because what we need

to build the airport that can accommodate up to 60 million passenger a year. Which is about, I think, the

size of Sonapur.

Speaker 1:

Okay. Actually I was going to

ask about that. It's very interesting that you are one of the few airlines that

does own and operate some airports. What sort of advantages does that give your business model? The

fact that you're an airline, but also heavily involved in operating these ai

rports?

Captain Puttipong:

I think the airport is one of a good revenue stream, actually. Since many times in other countries they

always mentioned that airport have a good revenue, making better than running the airline. Since we

have a good number of fli

ght in and out, like Samui, of course, that can be a good number and also help

us to manage the flight easier since we own the airport. We control the slot and we can create the flight

according to the demand, easier than, you can imagine that any flight t

o other place and we have to ask

for the slot to fly in, and then also Hong Kong, which is always full. You want to add more flight which is

almost impossible. At the time before COVID, once you own the airport but actually to own airport the

story is very

long. Then we start by, we have no place to go, so we have to build our own airport.

Speaker 1:

Very good. Well, that unfortunately is all the time we have, all we have time for today. It was a

fascinating conversation. Thank you very much, Captain Puttip

ong, for giving us such insights into what's

happening in the Thai market and with Bangkok airways. We really appreciate your time and also thank

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you viewers, for tuning in and hopefully you'll have a chance to catch some of the other Cap Alive

sessions. T

hank you very much.

Captain Puttipong:

Thank you.

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