Nok Air CEO Update

Transcript

Patee Sarasin:We launched into Kunming in probably around November, but in actual fact we've been doing charters all over the place now. In addition to what we're doing, we're actually going to put in the plans of the charters in the future as well to Linyang, There's a new Linjing, that's a new town. It's going to be— Wenzhou is another town as well that we're actually going to be flying to in the very near future. In actual fact, we're putting this process now for the next 6 months so that everything's progressing forward according to the slots and the, you know, all the regulatory stuff. So yes, we're going in a big way into China in the very near future. What are the schedules? We haven't done any scheduled flights into any towns. at the moment. The market has been very much on the sort of charter side. The reason being is because what we wanted to know was to understand the market better, and given the fact that it's full of all these charters, what it does is it allows us with no cost and definite profitability into these cities. So that's given us the idea how the markets are different from different cities, from the charters itself understanding travel agencies, what the demands are, and the type of people actually going to be flying on our planes. And it's been tremendously informative so far. At the moment, it's more of a learning stage for China itself. From Thailand to China, there's not a big market from Thailand to China at the moment, specifically, unless they're big cities like Guangzhou or something like that. So it's much more easier. But what we have to do is to understand both sides of the market. But currently, more towards is that the Chinese are really coming into Thailand in a big way. So, because it's charters, there's no need to learn much about all the specific areas in terms of driving them here. It's full every day anyways. Currently, Nok Scoot is trying to acquire 7 more 777s into the market. The reason why they have not upgraded for the 787s is purely because Our central governments have not yet— are not qualified or not yet there in terms of being able to approve the 787s. Now, having said that, 777s are very cost-effective planes and they're not that expensive to run. So basically right now, 7 is going to be the key number that's going to be brought in in the very near future. We're going to be receiving our first MAX in 2018. Currently, we've been acquiring about 2 NGs a year, per year at the moment, to substantiate our growth. By 2018, what we're going to be doing is getting rid of some of the old ones, and then these guys are going to be coming to replace them. Now with this, we're actually adding the ETOPS into the MAX programme. The reason is because not only China will be the market, but we're actually looking into India. going back to India in a proper way, and ETOPS is required in order to cross the Indian Ocean to make it much more cost-efficient. So that's what's going to be the next target as well, is moving to India as well. One will be delivered on August 17th, definitely. Maybe I have to go over there. And then the rest will be next year for the NGs, and then beyond that is the MAX coming in. Now these things again, we're putting— trying to utilize our aircraft now into more international than domestic market. But at the same time, we have to protect the shares of what we have. But we're much more in tune in terms of using the Q400s to fly into shorter destinations in terms of the local market now so that we can utilize our aircraft elsewhere. And that's what we have to do. The key main goal is the fact that by this October, The 737-800s have to be 11 hours in terms of utilisation, and that will bring us back into the black very quickly. Well, the capacity growth for us is always going to be humble in terms of what our competitors are going to be doing. I think our competitors from 10 aircraft is reducing down to 7 now, and they're feeling the pinch of what's going on in terms of saturation, in terms of the growth has been so fast. in Thailand itself, and they're looking to expand across to China as well. So everyone is pinpointing over there, but in terms of capacity-wise, we're going to remain humble as we grow, as what we've always been, and it's been quite successful for us because, you know, like I said to you, the key elements right now is not so much of the planes but so much of the terms of the pilots in order to man them. That's going to be the key issues in Southeast Asia for some time. So We have to be quite careful about that. Domestically, basically it's close to saturation, given the capacities from all the airlines here. However, having said that, the growth is still there, the growth is still there, but much, much slower than before, obviously, given comparative to the capacity. But it's still there, and we'll see when the opportunity arises because it's not so difficult Going into Thailand, the only problem is the slots. Phuket slots, that's filled up basically. We're talking about Chiang Mai and even the smaller towns are sort of filling up as well in terms of slots, so that we have to manage. The load factors has been going fine. The key problems of Hanoi right now is the yield is not so high. Now the reason is because we have Vietnam Airlines coming in And they're giving a full sort of a full-service airlines at the cost of the low costs sometimes. So that hampers the yields a little bit. If Vietnam Airlines were able to push the price up as what they would do in terms of legacy airlines cost was full service, I'm sure the market is still there and all the yields will go up. Win-win. Yangon has been very, very successful in the past 2 to 3 years. However, now Lion Air has just put in 2 flights a day into Yangon, and what we're seeing potentially right now is the fact that they're going to use the price war tactics into Yangon as well. So are we seeing the changes? A little bit, you know. So we'll see what happens. It depends on the strategy that these guys come in to spread the price war in order to fill up their aircraft. We're working on that. It would be next year when we actually launch this particular product again. We have to be quite careful whether it's going to be from Bangkok or is it from Chiang Mai or something like that. We're looking at, in terms of studies, where the market really is. It's not— everything doesn't have to start from Bangkok, as Patee said. So we have to see how it's going to work. And then if we do fly from Chiang Mai to Mandalay, we're going to be using the Q400s instead of the jets. Okay. So in other words, we want to meet the capacity that way. Well, currently we have a plan of being recertified in Thailand first with the AOC. They're recertifying every single airline. Nok Scoot is one of them, but Nok Scoot actually is going to be on process within the next 2 weeks with the IASA. We believe that should be on a positive side, and then we'll follow on with Nok Air and so forth, but we are planning to be audited hopefully by either this last quarter by the EASA Group. If that's the case scenario, then it should be fine, you know, the process. Well, that's what we're looking at in terms of India now, back to India again. We're working alongside with another carrier which I can't mention at the moment, but we are working with them in such a way that, well, that particular carrier probably will join the Value Alliance. On top of that, we're going to be working together in terms of how do we expand to India. into separate cities that they don't operate to, from. And so it's going to be quite— this time round, it's going to be quite different from the past. When will the MAX 8s arrive in China? Well, it depends on the ICAO. Currently, I have no specific dates. We're planning probably around within a year and a half or so before the ICAO is lifted. The government, the DCA, is working on that. on improving that particular service itself. And I can't tell you exact time because, number one, no control, and two, things are not going as fast as they should be. We've just started only a few months ago, right? What we're trying to do is to push something quite easy stuff now in terms of specific routes. For example, Japan with a Scoot is actually to start off with. And it's happening quite well. And we'll see what happens this particular high season, how we push it forward and see how it's going to go.

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