Thai Airways, Thailand’s flag carrier, is teaming up with Singapore’s budget carrier Tiger Airways to launch a new low-cost airline to capitalise on the growing Asian leisure travel industry.
Called Thai Tiger, the new airline will be based in Bangkok and focus on destinations within a five-hour flying radius, putting the growing tourist and intraregional business markets of China, India and Indonesia firmly within its target area.
It is expected to start operations in the first quarter of next year. Thai Airways will take a 51 per cent stake in it, with the rest owned by Tiger.
The new airline will be taking off in a market already fairly crowded with regional low-cost carriers such as Malaysia’s highly successful AirAsia, and Jetstar, the aggressive low-cost operation of Australia’s Qantas Airways that has already invested heavily in Vietnam and is now challenging Singapore Airlines on its home turf.
The joint venture also presents an uncertain future for Nok Air, a domestic low-cost carrier 39 per cent owned by Thai Airways that has had a turbulent relationship with its parent in the past.
“We believe that this move will provide revenue opportunities for Thai [Airways] and allow [it] to be more competitive in the region with the anticipated growth in the low-cost market as a result of continued Asean air liberalisation policies by 2015, which we expect will lead to growth in air travel in the Asian market,” said Piyasvasti Amranand, president of Thai Airways.
Although Tiger is substantially smaller than either AirAsia or Jetstar, it is expanding rapidly – it set up a wholly owned subsidiary in Australia last year – and having a base in Thailand will position it to take advantage of the large number of tourists who use Bangkok as a hub from which to visit neighbouring Cambodia, Vietnam, and Burma.
Thai Tiger could also have a big impact on south-east Asia’s aviation market, an area the airline industry hopes will be a key driver of growth in the coming years.
“The new joint venture … raises the bar in low-cost airline competition in Asia and could have a major impact on the pace of airline liberation in the region,” the Sydney-based Centre for Asia Pacific Aviation said.
CAPA said it could also soften Thailand’s latent opposition to the Association of South East Asian Nations’ plan for a regional open skies agreement and improve co-operation between Thai Airways and Singapore Airlines, which owns a 49 per cent stake in Tiger.
Singapore Airlines, despite its substantial representation on the Tiger board, has been unable to prevent the newcomer from going head-to-head against its Silkair subsidiary on a number of profitable routes.
