Troubles mount as budget airline boom in Thailand tops out

Reading Time: 3 minutes

Nok Air special paintThe emergence of evermore low-cost carriers in Thailand has caused a number of troubles for the country’s aviation industry that could have repercussions on the tourism sector, an important source of income for the nation.

The problems are manifold and span from safety issues of airlines, pilot and maintenance staff shortage, congestion, overcrowding and maintenance problems at the country’s main international airport in Bangkok, poorly-funded and highly indebted smaller private airlines.

Nok Air, Thailand’s second largest low-cost carrier behind Thai AirAsia, has been hardest hit so far. On February 14, the airline was forced to cancel nine domestic flights after some pilots went on strike, protesting against the tightening of aviation standards by the Civil Aviation Authority of Thailand (CAAT) to comply with the European Aviation Safety Agency (EASA), a move that disqualified some pilots.

On February 23, Nok Air, in which national carrier Thai Airways holds a 39.2-per cent stake, cancelled another 20 flights and announced the suspension of more domestic flights for the period up to February 28. Nok Air’s management said that the strike resulted from the dissatisfaction of some pilots who did not pass a new aviation management audit based on EASA standards.

The flights have been taken over by Thai Smile, a full subsidiary of Thai Airways, and Thai Lion Air, a subsidiary of Indonesia’s largest budget carrier Lion Air which is banned from flying into the EU for safety reasons.

Meanwhile, the Civil Aviation Authority of Thailand is considering revoking the aviation business licenses of four small airlines found to have racked up exorbitant debts. The airlines are City Airways (hub: Don Mueang, Bangkok), Kan Airlines (Chiang Mai), Asian Air (Don Mueang) and Jet Asia Airways (Suvanabhumi, Bangkok).

All of these airlines are facing liquidity shortages and owe substantial fees to airports, fuel suppliers, air traffic control service providers and authorities and have debts from unpaid aircraft leases. Asian Air has been banned from flying in January after Bangkok’s Central Bankruptcy Court ordered a freeze of the airline’s assets. The same happened to Bangkok-based Business Air which was meanwhile rebranded Intira Airlines under new ownership.

The IATA also voiced concerns about Bangkok’s main aviation hub, Suvarnabhumi airport. With some 52 million annual passengers, the airport ranks amongst the top air hubs in the world and is already running above its capacity of 45 million passengers per year while demand is growing by 10 per cent annually. Adding to that, there are safety concerns about “soft spots” on the tarmac, patches of asphalt that melt in the heat and ensnare aircraft wheels as they taxi to the gates, prompting delays. Aircraft frequently get “stuck” in the soft surfaces that are the result of sub-standard materials, IATA Director Tony Tyler said in February after meeting with Thai government officials visiting Bangkok, urging them to resolve the issue by using stronger concrete as material.

On the upside, national carrier Thai Airways’ financial performance showed signs of improvement in the fourth quarter of 2015 after struggling considerably in the previous three quarters. The airline posted a net profit of around $110 million after a loss of $390 million in 2014, mainly due to enhanced efficiencies and massive cost cuts and after Thailand Prime Minister Prayuth Chan-ocha set a March deadline for the airline’s recovery, otherwise the management would receive a “red card” and be transferred from their posts.

Charamporn Jotikasthira, Thai Airways’ CEO, now suggested the purchase of a 20-per cent of stake of Thai AirAsia to strengthen the national airline’s footprint in the low-cost carrier market.

Airlines in Thailand

Commercial
Thai Airways International
Bangkok Airways
Thai AirAsia
Thai AirAsia X
Nok Air
NokScoot
Orient Thai Airlines
Thai Lion Air
Thai Smile
Thai VietJet Air

Charter
Asian Air (grounded)
Asia Atlantic Airlines
Budget Lines
City Airways
Intira Airlines (formerly Business Air)
Jet Asia Airways
Kan Air
MJets
New Gen Airway
R Airlines
Siamjet Airlines
Solar Air
Legacy Air

 

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Reading Time: 3 minutes

The emergence of evermore low-cost carriers in Thailand has caused a number of troubles for the country’s aviation industry that could have repercussions on the tourism sector, an important source of income for the nation.

Reading Time: 3 minutes

Nok Air special paintThe emergence of evermore low-cost carriers in Thailand has caused a number of troubles for the country’s aviation industry that could have repercussions on the tourism sector, an important source of income for the nation.

The problems are manifold and span from safety issues of airlines, pilot and maintenance staff shortage, congestion, overcrowding and maintenance problems at the country’s main international airport in Bangkok, poorly-funded and highly indebted smaller private airlines.

Nok Air, Thailand’s second largest low-cost carrier behind Thai AirAsia, has been hardest hit so far. On February 14, the airline was forced to cancel nine domestic flights after some pilots went on strike, protesting against the tightening of aviation standards by the Civil Aviation Authority of Thailand (CAAT) to comply with the European Aviation Safety Agency (EASA), a move that disqualified some pilots.

On February 23, Nok Air, in which national carrier Thai Airways holds a 39.2-per cent stake, cancelled another 20 flights and announced the suspension of more domestic flights for the period up to February 28. Nok Air’s management said that the strike resulted from the dissatisfaction of some pilots who did not pass a new aviation management audit based on EASA standards.

The flights have been taken over by Thai Smile, a full subsidiary of Thai Airways, and Thai Lion Air, a subsidiary of Indonesia’s largest budget carrier Lion Air which is banned from flying into the EU for safety reasons.

Meanwhile, the Civil Aviation Authority of Thailand is considering revoking the aviation business licenses of four small airlines found to have racked up exorbitant debts. The airlines are City Airways (hub: Don Mueang, Bangkok), Kan Airlines (Chiang Mai), Asian Air (Don Mueang) and Jet Asia Airways (Suvanabhumi, Bangkok).

All of these airlines are facing liquidity shortages and owe substantial fees to airports, fuel suppliers, air traffic control service providers and authorities and have debts from unpaid aircraft leases. Asian Air has been banned from flying in January after Bangkok’s Central Bankruptcy Court ordered a freeze of the airline’s assets. The same happened to Bangkok-based Business Air which was meanwhile rebranded Intira Airlines under new ownership.

The IATA also voiced concerns about Bangkok’s main aviation hub, Suvarnabhumi airport. With some 52 million annual passengers, the airport ranks amongst the top air hubs in the world and is already running above its capacity of 45 million passengers per year while demand is growing by 10 per cent annually. Adding to that, there are safety concerns about “soft spots” on the tarmac, patches of asphalt that melt in the heat and ensnare aircraft wheels as they taxi to the gates, prompting delays. Aircraft frequently get “stuck” in the soft surfaces that are the result of sub-standard materials, IATA Director Tony Tyler said in February after meeting with Thai government officials visiting Bangkok, urging them to resolve the issue by using stronger concrete as material.

On the upside, national carrier Thai Airways’ financial performance showed signs of improvement in the fourth quarter of 2015 after struggling considerably in the previous three quarters. The airline posted a net profit of around $110 million after a loss of $390 million in 2014, mainly due to enhanced efficiencies and massive cost cuts and after Thailand Prime Minister Prayuth Chan-ocha set a March deadline for the airline’s recovery, otherwise the management would receive a “red card” and be transferred from their posts.

Charamporn Jotikasthira, Thai Airways’ CEO, now suggested the purchase of a 20-per cent of stake of Thai AirAsia to strengthen the national airline’s footprint in the low-cost carrier market.

Airlines in Thailand

Commercial
Thai Airways International
Bangkok Airways
Thai AirAsia
Thai AirAsia X
Nok Air
NokScoot
Orient Thai Airlines
Thai Lion Air
Thai Smile
Thai VietJet Air

Charter
Asian Air (grounded)
Asia Atlantic Airlines
Budget Lines
City Airways
Intira Airlines (formerly Business Air)
Jet Asia Airways
Kan Air
MJets
New Gen Airway
R Airlines
Siamjet Airlines
Solar Air
Legacy Air

 

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