Thai Airways International is discussing dropping all but two domestic routes and handing them to its low-cost affiliate Nok Air.

The move could benefit all three of the country's low-cost carriers, which have steadily gained market share at the expense of Thai since launching in late 2003 and 2004.

Nok chief executive Patee Sarasin says he is negotiating with Thai for the transfer of all of the flag carrier's domestic routes except for the largest two, Bangkok to Chiang Mai and Phuket. Thai now operates to 10 domestic destinations from its Bangkok hub, according to schedules provider Innovata.

Nok now has seven routes from Bangkok and will have nine by the end of October, three of which Thai has dropped since Nok's launch and six of which are now flown by both carriers. Nok earlier this year also took over from Thai three small point-to-point turboprop routes in northern Thailand.

© Nok Air

"Thai wants to move away from its home territory and focus on international markets," Patee says.

Thai owns 39% of Nok and leased it its first five aircraft. But Nok is independently run and will take two additional Boeing 737-400s in October from GECAS. Patee says Nok is now considering adding additional 737-400s by leasing them from lessors, Thai or Malaysia Airlines. The Malaysian flag carrier is going through a similar transition to Thai, and is handing most of its domestic routes to AirAsia.

Thai, which uses a mix of 737-400s, Boeing 747s and Airbus A300s and A330s domestically, now has a 46% share of the market, down from 83% prior to the launch of Nok, Orient Thai subsidiary One-Two-Go and Thai AirAsia. One-Two-Go now connects Bangkok with eight cities and Thai AirAsia with nine. Thailand's two other domestic carriers, Bangkok Airways and PB Air, are niche operators that mainly serve destinations the other carriers cannot access.

The conversion of Thailand's domestic market to predominately low-cost comes as all carriers switch from Don Muang to Bangkok's new Suvarnabhumi airport. Patee says landing and parking charges at the new airport, which opened in late September, are slightly higher but will be reduced to Don Muang's levels in about 18 months when a low-cost terminal is slated to open. ■

Source: Airline Business