Thai Tiger ruffles some political feathers

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Tiger Airways and Thai Airways International grabbed headlines three days ago with their announcement to form a new low-cost carrier in Bangkok, turning up the heat in the already competitive low-cost carrier market in the Asia Pacific.

The deal, however, seems to have not gone down that well with those in power in Thailand. Transport minister Sophon Zarum was quoted as saying that the deal was finalised “too fast” and wants to know how it will affect Nok Air, Thai’s low-cost affiliate.

A senior executive at Thai has dismissed Zarum’s remarks as “politicking”. Here is where it gets interesting.

Zarum is a member of Thailand’s Bhumjaithai political party, of which Newin Chidchob is the de facto leader. Chidchob, the former right-hand man of ousted prime minister Thaksin Shinawatra, is banned from politics until 2012 but remains highly influential.

Chidchob is known to be close to the folks behind King Power, which operates duty-free shops in Thai airports. And King Power is apparently “friendly” with Thai AirAsia, the associate of Tiger’s rival AirAsia, says the Thai senior executive. The duty free shopping giant and the carrier have a tie-up that allows AirAsia passengers to shop at King Power through the airline’s website.

King Power also has a 5% stake in Nok Air, which could explain why Chidchob’s allies could be concerned over the Thai-Tiger joint venture. It is worth mentioning that Thai, which has a 39% stake in Nok, has said that its low-cost associate will not compete directly with the new airline. Nok will instead focus on domestic routes, Thai has clarified.

Politicking aside, all eyes will surely be on the new airline. Tiger has spoken extensively about finding new bases and has been tight-lipped about its plans until now. And with ambitious expansion plans as well from rivals Jetstar and AirAsia, it looks to be exciting times ahead for the low-cost carrier market in Asia.

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2 Responses to Thai Tiger ruffles some political feathers

  1. Kinbin 6 August, 2010 at 10:29 am #

    Aha… Tigger moves in with Dumbo…. an interesting match indeed. I see an extremely messy “home”, and probably make bad bedfellows.

    It would be interesting to observe Tigger on the back of Dumbo as Dumbo flies about.

  2. eugenio 8 August, 2010 at 12:16 pm #

    Great analysis.

    Will indeed be interesting to see how this plays out, especially if Thai Airways itself is gradually forced to move more “mid-market” (to put it politely).

    I’ve heard that the politics within Tiger are also quite interesting, with the principal shareholders not getting along well at all.

    As an occasional customer, I just wish Tiger could make an effort to clean the planes every once in a while – the dirt marks, grease smears and food crumbs are really a disgrace.

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