Thailand's new government has reawakened fears that close historical ties with the military will surface once again to interfere with the country's aviation sector.

Prime minister Chavalit Yongchaiyudh, a former army chief of staff, has already blocked Thai Airways' five-year- restructuring plan and announced that Bangkok's new US$3.4 billion international airport will not open until 2002 or as late as 2005, five years behind schedule.

The long-running attempt to launch a second international carrier is also far from resolution. Bidding for the franchise was scrapped after the only applicant failed to lodge a surety bond. 'There is simply no coherent aviation policy, which makes rational forward planning impossible,' says a Bangkok-based analyst.

Thai Airways' strategy faces assault on two fronts: the airport delay reduces Bangkok's credentials as a regional hub, while a review of its fleet plans will limit cost savings from the rationalisation of its wide fleet and engine mix. Transport minister Suwat Liptapallop wants Thai's new board to reconsider the plan before re-submitting it to cabinet, causing further delays in implementation.

The government has not blocked the acquisition of the planned 21 aircraft at a cost of US$2.7 billion, but instead told the carrier to lease rather than buy. But some analysts view the scale of the order as excessive, with Thai still operating at load factors below the regional average. The government's insistence that Thai leases instead of buying is part of a drive to trim US$1.5 billion from the country's 1998 budget to ease its current account deficit, which last year stood at 8.2 per cent of GDP.

The most serious impact of the airport delay could be on the airline's alliance with United Airlines and Lufthansa, which are understood to be seeking an alternative Asian partner already. The new airport at Nong Ngu Nao, east of Bangkok, will open after rival facilities in Hong Kong and Kuala Lumpur.

The search for a second international entrant foundered when Princess Airlines failed to lodge a US$20 million guarantee. Princess emerged as the only contender after other interested parties, including Bangkok Airways, were put off by doubts over government policy on route access and competition. Srisuk Chantrangsu, director of Thailand's department of aviation, says new bids will be invited on the same terms as before. Business plans would have to include network, fleet and financial development while the carriers would be expected to cooperate rather than compete with Thai to challenge foreign carriers' penetration of the local market.

The selection committee will be chaired by Thai Airways' new chairman, Mahidol Chantrangkun, the permanent secretary of the transport and communications ministry. Thai is expected to be allowed to hold a stake in the second airline but without voting rights.


Source: Airline Business