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Bangkok Airways eyes low-cost segment in view of AEC boom

Sep 06. 2012
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By Bamrung Amnatcharoenrit


Bangkok Airways, a local boutique airline, is studying the feasibility of launching its own low-cost carrier to capture this fast-growing market.


Puttipong Prasarttong-osoth, president of Bangkok Airways Co, said yesterday that if the firm does not enter this segment, it would absolutely lose its share. Regional travel is expected to flourish after the advent of the Asean Economic Community (AEC) in 2015.

However, the company has not yet made any decision on the new venture because it has to spend most of the time on preparing to list on the Stock Exchange of Thailand in the first quarter of next year. After that, it will finalise its expansion plan.

The firm has registered capital of Bt1.2 billion and expects to increase that before listing. The estimated Bt10 billion that would be mobilised from the initial public offering would go to modernising its infrastructure, especially computerised operation, at Suvarnabhumi Airport, and expanding its fleet and network.

Bualuang Securities Plc is its financial adviser.

Its low-cost airline will be positioned as a "true pricing" service to make it distinct from existing ones like AirAsia, which charges for extra services such as checked-in luggage. It will follow the low-cost concept from Europe and fly regionally, with flight times within 3-4 hours.

The profitable airline plans to build up its fleet to 30 in 2015 from 19 at present, preferably with the Airbus A320, as part of its plan to cover the region.

Myanmar, Cambodia and Laos are the interesting markets. Especially Myanmar is hot because it has just opened its doors and everyone is keen to see it. Vientiane will be served by year-end and Mandalay next year.

Having airline partners both in Asean and outside will also be competitively advantageous. Within Asean, the firm is in talks with Philippines Airlines and Garuda, the flag carrier of Indonesia, about possible joint services including code sharing and most importantly, flight connections. It has already worked with Silk Air from Singapore, Malaysia Airlines and also Thai Airways.

Its three provincial airports in Sukhothai, Samui and Trat will be put to best use to connect to regional destinations. The three airports serve as its northern, southern and eastern bases respectively.

Also, flight frequencies to existing destinations will be stepped up. For example, Bangkok-Phuket flights will rise to seven from six a day and Bangkok-Maldives from five to six a week.

"The integration gives more traffic rights with Asean members and also a wider market base,’’ he said.

The single market under the AEC will bring more long-haul traffic to Asean.

However, business threats remain. One of them is that labour will be relocated due to the free flow of workers within Asean.

Bangkok Airways flies to 11 international and eight domestic destinations.

This year, it expects to boost sales by 20 per cent to Bt13 billion. After going public, the firm expects its sales to grow about 10 per cent a year.

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