And you think it's rough here !!
AFP
AirAsia spooks THAI offering
AFP
The launch of new budget carrier AirAsia, half-owned by the family firm of Thailand’s premier Thaksin Shinawatra, has sparked a storm of controversy and criticism it will undercut the national carrier, Thai Airways, just before a major share offering.
AirAsia announced last week that from January it would begin flying to popular Thai destinations, including the northern city of Chiang Mai and the holiday island of Phuket, at half the fare charged by the beleaguered Thai Airways.
Shin Corp, the telecoms empire which made Thaksin a billionaire before he went into politics and transferred control to his family, will own 51 percent of AirAsia Aviation in partnership with Malaysian low-cost carrier AirAsia.
Pro-democracy activists, competing airlines and aviation analysts are alarmed at the prospect of a carrier with close links to the prime minister competing directly with Thai Airways, which stands to be the big loser.
“This is unacceptable, it’s tantamount to sabotage,“ said Udom Tantiprasongchai, president of low-cost Orient Thai Airlines which is at risk of being swept aside by AirAsia.
“It’s a farce — no other country in the world would invite foreign airlines to operate domestic routes, the air traffic rights should be preserved for local operators,“ he said.
The timing of the AirAsia launch announcement last week is particularly unfortunate, coming ahead of an offering of 385 million Thai Airways shares which will reduce its government ownership from 93 percent to 70 percent.
“It could lead to less interest from investors, even if right now Thai is quite a profitable company,“ said an independent aviation analyst in Bangkok after the airline announced a 22 percent increase in annual profit Friday.
The Malaysian arm of AirAsia, which is following in the footsteps of successful European budget operators like EasyJet and Ryanair, has discounted as “irrelevant“ the links to Thaksin but commentators in Thailand disagree.
“It’s true that going with Thaksin is a fantastic advantage in the Thai market. He rules the country and every single project is decided by him, including all the aviation industry projects,“ the analyst said.
“That could lead perhaps to a boost for AirAsia and a decline in the domestic market for Thai Airways. It could be dangerous for them.“
Suriyasai Katasila of Thailand’s Campaign for Popular Democracy said the deal was improper and could be the downfall of the Thaksin administration which swept to power in January 2001 with an unprecedented parliamentary majority.
“Shin Corp should not use its political advantage to gain pace over other competitors and Prime Minister Thaksin also must be very cautious with regards to the family business,“ he said.
Suriyasai said it was clear Thaksin was still at the helm of Shin Corp despite the ownership shift to his wife and children.
“It’s laughable whenever somebody raises this issue. His son still lives with his parents — if he’s honest about it, why doesn’t he transfer his shares to a legal entity?“ he said.
“I think this issue will trigger the downfall of the Thaksin government. Thaksin must draw a clear line between his family business interests and the public interest.“
The democracy campaigner said that although in the short term the advent of the low-cost carrier would benefit the public, if it managed to put its competitors out of business, it could turn itself into a monopoly.
Spurred into action by the new threat, Orient Thai plans to launch flights between Bangkok and Chiang Mai from December at a cost of 999 baht ($25), one baht lower than AirAsia and half the cost of a Thai Airways flight.
“I am ready to fight and will directly position my business to confront AirAsia by operating flights on the same routes,“ said Udom, whose airline has operated for a decade, mostly in the charter business.
Thai Airways, criticised by Thaksin as lumbering and slow to innovate, is also planning to break into the budget airline business with “Sky Asia“ due to launch in April on the lucrative routes from Bangkok to Chiang Mai and Phuket.
But analysts say the initiative is too little too late.
Far from having any reservations over the possible effects on Thai Airways, Thaksin warned last week that the carrier must lift its game.
“Everybody must adjust themselves. In the near future there will be no monopoly and every business sector will be liberated,“ he told reporters.
Thai Airways, which Thaksin once famously declared “sucked“ because of its poor service standards, would be relegated to servicing the niche market of upscale passengers, he said.
The government has also admitted that the financially ailing State Railway of Thailand will be harmed as AirAsia’s fares will be on a par with rates for air-conditioned rail carriages.
“This conflict of interest is not the best way to develop a country,“ said the independent analyst, adding however that Thailand’s richest man had an unerring nose for a good deal.
“Thaksin has seen the fantastic development of low-cost carriers and this business could have some synergy with his telecoms network. The investment is not that great and it’s a good way to enter the transport business,“ he said.
“It’s true that for normal democratic countries it would be really very strange, but that’s the way business is done in Thailand.“
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