View Full Version : Thai Airways, Virgin Blue In Talks On Low-Cost Airline

3rd Dec 2003, 23:14
Dow Jones
Wednesday December 3, 11:23 PM AEDT

Thai Airways, Virgin Blue In Talks On Low-Cost Airline

BANGKOK (Dow Jones)--Thai Airways International is in talks with Australia's Virgin Blue Holdings Ltd. to set up a low-cost airline joint venture in Thailand, an official close to the deal said Wednesday.

"We are now in talks with many potential partners, and the proposal by Virgin (Blue) is very attractive," the Thai Airways official said.

Thai Airways has been looking to set up a low-cost airline joint venture the past few months as low-cost air travel is expected to boom in the coming years with new players entering the market.

Some analysts have recently expressed concerns over Thai Airways' performance at home as AirAsia Aviation Co., jointly owned by Malaysia's AirAsia Sdn. Bhd.and Thai telecommunication firm Shin Corp. PCL (will start domestic flights in Thailand in January.)

Thai Airways Chairman Thanong Bidaya said last month that the carrier's joint venture will start operations early next year.

He said potential partners are likely to be local entities in the beginning, but Thai Airways would welcome regional airlines to support its future plan to operate low cost flights to Asian destinations.

Thanong said the budget airline will initially need two or three planes, likely to be leased from Thai Airways, to serve four possible destinations: Bangkok, Phuket, Chiang Mai and Udon Thani.

The low-cost airline is expected to have an initial registered capital of 200 million baht ($1=THB39.271), with Thai Airways holding 25%-49%.

December 3, 2003

Thai Airways International has held talks with Australia's Virgin Blue about setting up a budget airline, a Thai Air source said on Wednesday, joining other Southeast Asian carriers eyeing low-cost flights.

The talks come after Malaysian budget carrier AirAsia signed an agreement last month with Thailand's Shin Corp to launch a Thai budget carrier in January.

The source said Virgin Blue, owned by Richard Branson and Australia's Patrick Corp, was one of three potential foreign partners Thai Airways was negotiating with. It expected to conclude a deal in January.

"We are talking with Virgin and also with another two foreign airlines. We should conclude the deal within 30 days from now," the source said. He declined to name the other two companies.

Virgin Blue, Australia's second-ranked airline, confirmed it had held talks with Thai Airways but said there was no proposal on the table.

"We exchange ideas with a wide range of airlines in the region and we will certainly look at any opportunities, but at this point there is no proposal on the table nor is anything expected," Virgin Blue's head of commercial, David Huttner, said in Sydney.

Huttner said Virgin Blue, whose low-cost operation has snared 30 percent of the domestic Australian market, was focusing on growth opportunities in the South Pacific.

Thai Airways has long planned to set up a low-cost airline as part of a government plan to make the northern resort city of Chiang Mai, Prime Minister Thaksin Shinawatra's home town, a regional hub.



Pic Thai MD-11