Beleaguered Thai Airways is facing the prospect of direct competition from a major new Thai competitor as early as next year.

The new coalition government is pressing ahead with deregulation and has promised the newcomer access to all of Thai's routes. This comes as a massive blow to the flag carrier, which is already reeling from delays to critical restructuring plans (see feature page 32), and was expecting protection from competition on its existing network for several years at least.

But the government has signalled it wants an open skies pact with the US and has eased its stance on new entrants in a bid to encourage local competition.

An earlier tender for the startup authority failed after potential bidders were put off by rules excluding them from Thai's profitable routes.

A second round was launched in February, with interested parties given until March 26 to submit bids. Six groups have shown interest including private domestic operator, Bangkok Airways.

Each bidder has to produce a US$20 million letter of guarantee issued by a local bank. Other startup requirements include a three-member consortium, in which each member holds no more than 40 per cent and all three hold at least 70 per cent. Foreign ownership is limited to 15 per cent, and a holding by a foreign airline to 5 per cent.

Bidders must commit to at least US$115 million in startup capital and to a listing on the Bangkok stock exchange. A decision is expected in June after which the winner will be protected from any new competition for five years.


Source: Airline Business