Prospect dim for Tiger Airways
Thai Airways International is likely to scrap its Thai Tiger Airways joint venture with Singapore's Tiger Airways, as no progress has been made on launching the project, the memorandum of understanding underpinning which is due to expire at the end of thi
"The two airlines have already extended the original memorandum of understanding once, |but [THAI's] management has |not yet received word of any move about a [further] MoU extension," said THAI chairman Ampon Kittiampon.
The current MoU expires this month. If no action is taken by the company's board of directors, it could spell the end for the planned budget carrier, Ampon said.
THAI and Tiger had envisioned getting Thai Tiger up and running in March or April of this year. Co-investors planned to use initial capital of Bt200 million. THAI was to invest Bt99.6 million, or 49.8 per cent, in the venture, while THAI affiliate firms were to take 1.2 per cent and Tiger Airlines Holdings the remaining 49 per cent.
According to the original operating plan, Thai Tiger was to operate domestically and in the region, with destinations including Kuala Lumpur, Penang, Singapore, Macau and Shenzhen.
Ampon said THAI would now focus on its new business unit, Thai Smile Air, which will compete with low-cost airlines in both domestic and regional markets.
"Thai Smile is a Thai company, and we will get 100-per-cent income," he said.
Thai Smile Air will serve domestic destinations such as Ubon Ratchathani, Khon Kaen, Chiang Rai and Surat Thani from July 2012, with international operations to Southeast Asia, China and India starting in 2013.
Thai Smile Air will use four Airbus A320 aircraft.
THAI's average cabin factor (percentage of seats sold) during the first eight months was 72 per cent. The figures for its Japan |route are much improved since |taking a hit earlier in the year because of the March earthquake and tsunami.
The company expects a very tough situation in the last quarter this year, especially on European routes.
Moreover, the airline faces high fuel prices of more than 30 per cent over last year's level, but hopes to see a profit if oil prices remain at US$100 per barrel.
However, the company aims for a 75-per-cent cabin factor this year and expects that the last quarter will help boost business.
To reach the target, the airline plans to operate direct flights between Bangkok and Brussels, and between Phuket and Copenhagen.
Moreover, the airline aims to increase revenue from other units such as catering and ground and handling services.
The company expects to earn profit of Bt500 million from catering and Bt800 million from ground and handling services.
