Nok Air records higher profit
Despite widespread flooding in Thailand from July to October last year, which saw domestic travel demand drop about 11 percent, budget carrier Nok Air has reported annual profit of 220 million baht (US$7.33 million).
According to Nok Air’s chief executive officer, Patee Sarasin, this was 193 million baht more then what was projected, although it was a sharp, 64 percent decline from the year-earlier profit of 618 million baht.
The floods also swamped Bangkok’s Don Muang airport, forcing Nok and rival Orient Thai Airlines (OTA), to move their operations to the larger Suvarnabhumi Airport, 25km from the Thai capital, on 25 October. The floods cost Nok Air 100 million baht, due to the drop in travel demand and the relocation of operations.
Nok Air says the airline’s fuel bill also increased significantly, due to longer waiting times for take-off and landing at Suvarnabhumi Airport, because of increased congestion at the hub.
Nok Air expects domestic demand will rebound in the second half of 2012. The carrier, which is poised to increase capacity by 15 percent, has projected that revenue will jump 47.5 percent this year, to 5.9 billion baht.
Nok Air estimates that it will carry 5 million passengers this year, up from 4 million in 2011. The airline operates a fleet of 12 aircraft, five Boeing 737-800 jetliners, five 737-400s and two ATR72-500 turboprops. The ageing 737-400s are now being phased out.
Nok Air expects to move its operations back to Don Muang on 1 April, when the facility reopens for operations. Don Muang was closed for six weeks as a result of flood damage, and repairs have cost about 20 million baht.
Thai AirAsia challenges rivals to Colombo
Three full-service airlines operating between Bangkok and the Sri Lankan capital Colombo will face a new challenge when low-cost carrier Thai AirAsia launches daily flights using Airbus A320 jetliners on 1 March.
The three carriers are Thai Airways International, Sri Lankan Airlines and Hong Kong-based Cathay Pacific Airways. Thai Airways and Sri Lankan operate daily services using Boeing 777-200 and Airbus A330-200 widebody aircraft, respectively, while Cathay offers thrice-weekly services using 777-200s.
Colombo will be Thai AirAsia’s 16th international destination, and makes the Bangkok-based airline the first LCC to operate the route. The budget carrier, which also serves a network of ten domestic destinations, will introduce two new domestic routes later this year, to Nakhon Phanom in north-eastern Thailand and Trang in the south.
Separately, Thai AirAsia says its proposed Initial Public Offering (IPO), postponed from December 2011, is now on track to take place in the first quarter of 2012. An airline official in Bangkok says the share sale could not be held earlier because of unfavourable market conditions caused by the country’s heavy rainfall from July to October, which flooded 61 of Thailand’s 77 provinces.
The IPO plan was drafted in 2008, but was only firmed-up in March last year, when the lead underwriters – Credit Suisse Securities (Thailand), CIMB Securities (Thailand) and Thanachart Securities – were appointed.
Thai AirAsia – an affiliate of Malaysia-based LCC AirAsia – plans to offload 15-20 per cent of its shares to raise US$200 million to fund its expansion.
THE COMPETITION Commission of India (CCI) has given cleared several Kingfisher Airlines, IndiGo, SpiceJet and Jet Airways of any wrongdoing after they raised fares during the strike affecting state-owned flag-carrier Air India in April last year. The CCI notes that none of the carriers has a market share greater than 20 percent, adding that “there is no express or tacit agreement, resulting in cartelisation amongst the airlines”. Since the airlines follow a dynamic pricing system, the CCI says the services offered are perishable and capacity is fixed in advance. “These two characteristics have bearings upon the pricing strategies of airlines because of possible variations in the opportunity cost of sale,” CCI says.
INDIA’S CIVIL aviation regulator, the Directorate General of Civil Aviation (DGCA), has found that Indian carriers are violating safety norms because of financial difficulties.”One airline does not report incidents that compromise on safety, another does not have the technology for two-way communications with its planes and the third appoints a top operations officer who is not a pilot, and all Indian carriers face a serious shortage of aviation safety officers mandatorily required,” says a DGCA report based on a financial audit of the country’s carriers. The DGCA found that a third of Kingfisher Airlines’ fleet remains grounded because of a lack of spares, while AI Express, the low-cost international subsidiary of flag carrier Air India, is facing a shortage of pilots, instructors and cabin crew. Other Indian carriers, including Jet Airways, Jetlite, IndiGo, SpiceJet, Alliance Air and GoAir are also facing problems with crew shortages and insufficient training.