BANGKOK- The announcement early this week that Thai Airways International will go along with Singapore-based Tiger Airways to launch a new low cost carrier. At the press conference, answering a question if it would request a big PR exercise to convince Thai people of the well-being for Thai Airways to join forces with a Singaporean company -Singapore investments have been a sensitive issue for Thailand in the recent past-, Thai Airways President Piyasvasti Amranand could only agree: ” We will have to explain clearly what is all about. And we will have to convince not only Thai people but also our own Unions”, he explained.
Mr Amranand probably just forgot to mention as well Sophon Zarum, the current Minister of Transport.
The ink was still not dry on the Memorandum of Understanding signed by both airlines that the Minister started on Tuesday the offensive. According to the Bangkok Post and the Nation daily newspapers, Mr Zarum complaint that the deal between Thai and Tiger was precipitated and that the Ministry of Transport had no time to study the project as he was informed just two days before the signature of the MoU. But according to the national carrier’s internal sources, the supposed rush to sign the deal helped at least to avoid seeing the Ministry slowing down the procedure or eventually derailing it. Mr Zarum comments forced Thai Airways President to rush to provide an explanation to various Ministries…
Thai Airways International has Thailand’s Minister of Finance as its main shareholder. Mr. Amranand took over the presidency of the airline in 2009, following the disastrous presidency of Apinan Sumanaseni. The new President got the backing of Thailand Prime Minister Abhisit Vejjajiva that he would be able to run the airline independently, according to business criteria and without interference from political parties.
However, the Minister of Transport does not seem to agree completely on both Mr Vejjajiva and Mr Amranand’s vision of business at Thai Airways. Mr. Zarum comes indeed from a different political party than Mr. Abhisit, and this party has obviously other priorities. Mr Zamrun’s party is under the influence of Thai politician Newin Chudchob. According to local newspapers and even some sources at Thai Airways, Mr. Chudchob is ‘keener’ on Thai AirAsia, which could lose out some business from renewed competition by Thai Airways In 2009, Newin Chudchob acquired a soccer club in Isaan and he concluded then with TAA a deal to transport the fans of the club in Bangkok at discount prices.
So far, both Prime Minister and Ministry of Finances have been supportive of Thai Airways decision to ink the deal with Tiger Airways, forcing Mr. Zarum to make a spectacular u-turn and to acknowledge that he would not meddle into Thai Airways’ decision as it was already to late. Mr Zamrun declared also that he does not want to be accused of political collusion. But Mr Zarum’s first reaction shows once again that he obviously belongs to Thaïland old politicians cast. The one, which thinks that its own interest has a higher priority than the general public interest.
Thai Airways International’s approach with Tiger Airways is probably the best strategy to survive heavy competition in Thailand’s aviation market. Thai has seen its market share on domestic routes dropping from 80% to 50 % and its regional market share from 42% to 30 % over the last few years to the profit of low cost airlines and foreign carriers. As Thai was not able to raise its stake into its low cost affiliate Nok Air to take the majority –other shareholders refuse to sell-, it had only little choice. Tiger Airways has already a great experience with its two airlines and will bring its expertise to Thailand’s national carrier. The Department of Civil Aviation already cleared the issue of the aircraft’s ownership, which could be temporary registered in Singapore until Thai Tiger gets its own aircraft. The airline will be 51% owned by Thai Airways and de facto considered as a Thai entity.
Singapore’s supposed influence on the destiny of Thailand’s newest low cost carrier is likely to surface regularly. After all, this is Thailand’s political world. “We are aware that each country has its own strength and problems and we are prepared to it,” explained during the press conference Tony Davis, Tiger Airways CEO.