Thai Seeks 10-Airline Pact to Add Routes, Counter Low-Cost Group

Thai Airways Seeks a 10-Airline Alliance
  • Focus to be on smaller cities in China, India, Southeast Asia
  • Chief says move would mean modifying current turnaround plan

Thai Airways International Pcl is seeking an alliance with as many as 10 other Asian carriers in order to add destinations and counter a similar move grouping together several of its low-cost rivals.

A series of bilateral accords could unite airlines from across the region to boost connectivity in India and China and smaller markets such as Myanmar and Vietnam, Charamporn Jotikasthira, Thai’s president, said in an interview. The company lacks the cash to expand its network via acquisitions, he said.

The plan signals a move away from simply siphoning more connecting traffic through Bangkok as envisaged in Thai’s two-year turnaround strategy, Jotikasthira said, and comes after the formation last month of the Value Alliance coalition of eight budget carriers spanning Japan to Australia.

“Demand has been changing,” the executive said in Dublin. “All the requests on air traffic control into Thailand has been point-to-point to secondary cities. The model that we’ve been preaching in the past is going to be different.”

Malaysia Moves

While leading Asian operators such as Singapore Airlines Ltd. and Cathay Pacific Ltd. remain global players, other flag carriers have reached the same conclusion as Thai. Malaysia Airlines Bhd. is more advanced with moves to turn Kuala Lumpur into a regional hub and says it will order new planes to ply under-served short-haul routes in the next few months.

The Value grouping, while set to be the world’s biggest alliance of low-cost airlines, may not trouble Thai unduly, since it brings together smaller players including Singapore’s Scoot and Cebu Pacific Air of the Philippines that have a combined fleet about the same size as local low-cost No. 1 AirAsia Bhd.

Any Asian pact involving Thai must complement its role in the Star Alliance, Jotikasthira said, adding that he wants to expand relationships with existing partners including Star leader Deutsche Lufthansa AG after Thailand escaped possible blacklisting in a European Union safety review in December.

Thai, which plans to remain a full-service carrier, is also open to interlining and code-sharing “with anyone, any range,” the executive said last week at the International Air Transport Association’s annual gathering.

Jotikasthira said that Thai is on track to boost profit margins after struggling to match the aircraft load factors of some competitors, averaging about 5 percent fewer passengers per flight.

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