Despite the denials of bureaucrats, there are growing signs that Thai Airways International will get its hook into the second airline, which was given the go-ahead in late May.

The first and perhaps most ominous sign of this is in the final terms of reference, which omitted the clause from the first draft that specified that no state enterprise be allowed to hold shares in the airline. Aviation officials insist publicly that Thai will not hold any equity, but add the qualifier that the final decision is up to the minister of transport and communications, whoever that may be when the time comes.

Former Thai president Chatrachai Bunya-ananta, who is putting together a consortium to bid for the second carrier, says this uncertainty is a point of concern. He declines to elaborate but is clearly referring to the fact that without a written mandate, a ministerial decision will be subject to all kinds of political influences, and certainly strong pressure from the air force which effectively controls Thai. Chatrachai feels that any Thai stake will make the second airline an extension of Thai from the outset and virtually inoperable on purely commercial grounds.

Chatrachai has held talks with various bankers about raising the Baht3.5 billion (US$140 million) minimum registered capital required for any bid. One of his potential trump cards would be pulling in General Prem Tinsulanonda, a privy councillor and former prime minister, who has close relations with both the Thai royal family and the military.

Chatrachai admits he 'may have informally mentioned the subject' of chairing the second airline to General Prem but claims to have received no commitment. If the general does come in, Chatrachai will hope he can rein in Thai, the politicians and the military.

Conversely, Virachai Vannukul, advisor to the executive chairman of Bangkok Bank, suggests Thai should have some kind of a 'strategic alliance' with the second carrier, but no equity.

He claims foreign airline involvement, restricted to 5 per cent, would only breed conflict. Virachai is a former managing director of Air Siam, Thailand's first privately owned airline, which Thai put out of business in the late 1970s. He is assessing what role Bangkok Bank might play in the second airline.

That is music to the ears of Thai president Thamnoon Wanglee, the master aviation politician who would ideally like to see many of Thai's smaller domestic and regional feeder routes offloaded on to a second airline, hence cutting Thai's costs and raising its profits.

The conditions permit the second airline to operate domestic, regional and international routes. That means potential future bunfights with Thai over traffic rights, a situation Thai aviation negotiators want to avoid.

Imtiaz Muqbil

Source: Airline Business