Thai Airways Seeks 10-Airline Alliance vs. Value Alliance

To counter Value Alliance?

Up against the 8-member pan-Asian LCCs, Thai Airways International (TG) seeks a similar grouping with 10 Asian carriers to increase destinations and counter Value Alliance.

A series of bilateral accords could unite airlines from across the region to boost connectivity in India and China and smaller markets such as Myanmar and Vietnam, THAI president Charamporn Jotikasthira said in an interview. The company lacks the cash to expand its network via acquisitions, he said.

The plan signals a move away from simply siphoning more connecting traffic through Bangkok as envisaged in THAI’s two-year turnaround strategy, Mr Charamporn said, and comes after the formation last month of the Value Alliance coalition of eight budget carriers spanning Japan to Australia.

“Demand has been changing,” the THAI executive said in Dublin. “All requests on air traffic control into Thailand have  been point-to-point to secondary cities. The model that we’ve been preaching in the past is going to change.”

Malaysia Moves

While leading Asian operators such as Singapore Airlines and Cathay Pacific remain global players, other flag carriers have reached the same conclusion as THAI. Malaysia Airlines is more advanced with moves to turn Kuala Lumpur into a regional hub and says it will order new planes to ply under-served short-haul routes in the next few months.

The Value grouping, while set to be the world’s biggest alliance of low-cost airlines, may not trouble THAI unduly, since it brings together smaller players including Singapore’s Scoot and Cebu Pacific Air of the Philippines,  that have a combined fleet about the same size as local low-cost No. 1 AirAsia.

Any Asian pact involving THAI must complement its role in the Star Alliance, Mr Charamporn said, adding that he wants to expand relationships with existing partners including Star leader Lufthansa after Thailand escaped possible blacklisting after a European Union safety review in December.

THAI, which plans to remain a full-service carrier, is also open to interlining agreememts and code-sharing “with anyone, any range”, he said last week at the International Air Transport Association’s annual gathering.

Mr Charamporn said that THAI is on track to boost profit margins after struggling to match the aircraft load factors of some competitors, averaging about 5% fewer passengers per flight.



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