THAI drops plan for low-cost airline next year amid losses

BANGKOK: -- The attempt to launch a low-cost airline next year by Thai Airways International (THAI) will most likely be dropped due to its ongoing financial losses.

Ampon Kittiampon, the board's chairman, confirmed on Thursday that the company's board had decided that launching a low-cost carrier would not be included in its "strategic business plan" this year.

He added that he was not pleased with THAI's financial results for the second quarter because it had posted a loss. Though the airline's cabin factor was good during the period, he said the general business performance had not gone this way.

From now, he said, THAI will spend more time improving its financial performance so it returns to profitability after suffering losses of Bt10.2 billion last year. It will also focus on its sister airline, THAI Smile, so it can spread its wings wider, especially regionally. THAI Smile was launched early last month.

He said the firm would analyse the performance of THAI Smile after it has been flying three to six months. The newly launched airline claims to have a cabin factor of more than 80 per cent in the Bangkok-Macau route.

This low-cost airline was the brainchild of Piyasvasti Amranand, the former THAI president who was ousted in May.

A source at THAI, who declined to be named, said the board may also consider reshuffling some key positions held by people with strong ties to Piyasvasti at the next meeting on Friday, saying the second-quarter financial losses are down to their performance.

They include Pandit Chanapai, executive vice president, commercial, as well as Teerapol Chotichanapibal, executive vice president for product and customer services, and Sunatee Isvarphornchai, who is a vice president for corporate communications and public relations.

However, some board members disagree with the move, saying the new president should acknowledge it. The board will also consider downsizing the firm's public relations department.

THAI's acting president and executive vice president Chokchai Panyayong said it was essential for the national carrier to launch a low-cost airline in order to get a share of the market, which has been growing continuously and will blossom once the Asean Economic Community is implemented in 2015. Also, the sister airline would strengthen the airline's role in the aviation industry.

Under the plan, THAI has assigned Nok Air, another low-cost airline that the carrier holds a 49-per-cent stake in, to carry out research on its business opportunity. If the outlook is good, THAI will move ahead by forming a joint venture with Nok Air and buying a larger stake.

-- The Nation 2012-08-13