Bangkok (The Nation-Thailand/ANN) - Nearly 50 low-cost airlines, including Thai Wings and Thai Tiger Airways, are preparing to enter Thailand's aviation sector to cash in on this growing market segment in the region.
Piyasvasti Amramnand, president of Thai Airways International, said some low-cost airlines had already received permission from the department of civil aviation to operate in Thailand. The rest are in the process or in the planning stages.
He said low-cost airlines from India were likely to become big players in the Thai market soon.
India is one of the fastest growing markets for Thai tourism. The market for business travel as well as niche markets such as weddings are expected to continue to grow over the next decade.
Other low-cost carriers based in East and Southeast Asia are also eyeing the Thai market, Piyasvasti said. One of these is a new low-cost subsidiary of Singapore Airlines, which will focus on longhaul routes and supplement the existing low-cost unit Silk Air.
The new Singapore Airlines unit is to compete directly with AirAsia X, which operates from Kuala Lumpur to Japan, China, the Middle East, Australia and Britain.
Moreover, Japanese operator All Nippon Airways has created a new budget carrier called Peach, which was launched in the Japanese market last week. Peach was conceived last year at the same time as THAI made plans to enter a joint venture with Tiger Airways to operate Thai Tiger Airways.
Piyasvasti said many countries had created new budget airlines easily, but the Thai government had seemed reluctant to support THAI pursuing new business.
"The Thai Tiger Airways project is stuck at the transport ministry. Meanwhile the new Thai Wings unit is still waiting for new aircraft. THAI has lost passengers to budget airlines. Our market share is also being stolen by premium airlines, especially from the Middle East region," Piyasvasti said.
The low-cost airline market in Thailand grew from 2 per cent seven years ago to 17 per cent this year. THAI's market share in the low-cost segment dropped from 47 per cent in 2005 to 36 per cent this year. Mostly of that business went to AirAsia Group. THAI used to post 15 billion baht (US$495 million) in revenue from the domestic market but now it has been reduced to just 10 billion baht ($330 million).
THAI still plans to operate two low-cost airlines. Thai Tiger Airways, its joint venture with Singapore-based Tiger Airways, will serve the market between THAI and Thai Silk and will target domestic and regional passengers. However, it has yet to get off the ground.
THAI also plans to launch Thai Wings in the second quarter of next year. It will operate two narrow bodies planes in its first year and is set to focus on the super low-cost segment. It will link Bangkok with Rangoon, Ho Chi Minh City and Vientiane, as well as Ubon Ratchathani province.
"As a big airline, THAI needs to create sub-brands to serve different markets. THAI is going to tap the premium market, Thai Wings will be in the super low-cost market and Thai Tiger Airways will be in the middle," he said.
According a source in the low-cost airline industry, THAI is one of most recognised airlines in the world, especially in premium markets. It earns revenue of more than 200 billion baht ($66 million) per year and enjoys billions in profit annually.
Being one of the top players, THAI should consider competing with similar operators such as Singapore Airlines, Cathay Pacific, British Airways, Etihad, Emirates and Air France, the source said.
Given the relatively small size of the budget market, it would be smarter if the airline maintained its strength in the premium market, the source said.
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