Thai International Airways International dominates the Thailand market as IATA BSP data (Airport IS) illustrates below;
|
Carrier |
Annual Passengers (Two-Way) |
Market Share |
|
Thai Airways International |
12,141,672 |
32% |
|
Thai AirAsia |
3,781,622 |
10% |
|
Bangkok Airways |
2,340,779 |
6% |
|
Nok Air |
1,250,531 |
3% |
|
Cathay Pacific |
1,225,109 |
3% |
|
Others |
20,739,713 |
46% |
|
Total |
37,916,921 |
100% |
Source IATA BSP data (Airport IS) May 2009-10
LOW COST PRESSURE
Whilst Thai Airways International still enjoys the majority share of the Thailand market with 32% of all passengers. Its market share has come under pressure from AirAsia's Thai subsidiary which now has a 10% market share. Thai AirAsia now operates to 16 international destinations from Thailand where it operates primarily from Bangkok but also operates to Jakarta, Hong Kong and Singapore from Phuket.
From Bangkok, where Thai Airways International has its major hub, the carrier has been put under pressure from Thai AirAsia which now competes with Thai Airways International on eleven of the thirteen international destinations that Thai AirAsia serves from Bangkok. The carrier also compete from Bangkok on the domestic sectors of Phuket, Chiang Mai and Hat Yai. It is a clear attempt from the low cost carrier to put pressure on the national airline which it will consider to have a high operating cost and vulnerable to a sustained low cost attack.
The table below illustrates the market where Thai Airways International now faces international competition from Thai AirAsia.
|
Destination |
Thai Airways International Weekly frequency |
Thai Air Asia Weekly Frequency |
|
Singapore |
28 |
21 |
|
Hong Kong |
30 |
14 |
|
Kuala Lumpur |
18 |
21 |
|
Ho Chi Minh City |
14 |
14 |
|
Taipei |
14 |
7 |
|
Myanmar |
14 |
7 |
|
Phnom Penh |
14 |
7 |
|
Hanoi |
14 |
7 |
|
Guangzhou |
14 |
3 |
|
Bali |
14 |
3 |
|
Penang |
7 |
7 |
Source Flightbase 14-20 September 2010
IATA BSP data (Airport IS) demonstrates the impact that Thai AirAsia has had on the national carrier in terms of yield. During the time period of May 2006-2007, Thai AirAsia had just a 6% share of the Thailand market, during this time the average one way yield on a Thai Airways International flight was over 340USD (one-way), whereas in the same time frame from May 2009-10 the average fare was 280USD(one-way).
With falling yields and limited scope to reduce its cost base, the only option for Thai is to create a low cost carrier for the short haul network from Bangkok. Thai has attempted to create a low cost brand through Nok Air, however the carrier has failed to establish a credible low cost brand able to compete with Thai AirAsia. Nok will become a regional carrier focused on domestic services and will halt its international expansion.
WHY TIGER?
By joining with Singapore based Tiger Airways, which along with Jetstar Asia and AirAsia is one of the three leading low cost brands in Asia, Thai will be able to create a new low-cost operator that will be able to compete with Thai AirAsia which shows no sign of halting its growth in the Thailand market.
With Thailand being one of the leading leisure destinations in Asia, the need for Thai to re-model and be better equipped to face the low cost threat is important. Thai will lend on the experience and knowledge of Tiger Airways which has successfully created a strong low cost model in Singapore. There will also be a strength of brand at both ends of the market.
For Tiger Airways, it will allow the low cost carrier to take its brand into another market in Asia with the strength of the national carrier behind it. This,coupled with a mutual desire to fight the growing strength of the Air Asia brand which is now in Vietnam, Indonesia and Thailand.
More importantly it will make AirAsia's further investment in its Thai subsidiary more risky and shows that maybe AirAsia has been slow to realise the international potential of the Thailand market, particularly in the medium and long haul sectors.
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