Thai Airways International (THAI) is experiencing an attitudinal U-turn as it seeks to foster an unprecedented friendship with long-time arch rival AirAsia.
Thai AirAsia’s latest A320 aircraft, its 28th, is docked at Don Mueang airport. The no-frills carrier is discussing a joint venture with arch rival Thai Airways. BOONSONG KOSITCHOTETHANA
Sorajak Kasemsuvan, president of the country's flag carrier, personally made the overture during a recent meeting in Bangkok with Tony Fernandes, the chief executive of Asia's largest and fastest-growing budget carrier group.
It was the first meeting of any kind between the leaders of the two feuding carriers, which over the past decade have publicly made known their intention of trumping each other in the fiercely competitive airline industry.
THAI has lost considerable domestic and regional market share to AirAsia, whose aggressive expansion is seen as a major threat to several legacy airlines including the state-controlled carrier.
Mr Sorajak spoke about several cooperation possibilities between the 53-year-old airline and the 20-year-old no-frills carrier including becoming code-share partners _ a proposal that is raising the eyebrows of industry executives.
Two other ideas he suggested were THAI, AirAsia and the privately owned Bangkok Airways joining hands to develop a pilot training pool; and allowing AirAsia to use THAI's aircraft maintenance services.
Fernandes: Met recently with THAI
However, several of the old guard at the flag carrier including key members of the board and the management team have not been completely receptive to the overture made by Mr Sorajak, who assumed the position of president only last October.
They do not want THAI to get too cosy with AirAsia, which they see as having undermined the flag carrier's struggling operations, particularly in the context of becoming a business alliance through a code-share arrangement, said insiders.
"The wounds inflicted on THAI [by AirAsia] are too deep to be healed quickly by someone who probably does not have a good grasp of what happened before joining the airline," said one executive.
"There are also issues of pride and honour, both of which remain ingrained in their minds."
THAI tried in vain to set up a low-cost carrier (LCC) in partnership with Singapore's Tiger Airways two years ago to arrest its eroding market share by competing head-on with Thai AirAsia (TAA), the group's local sister airline and which commands the lion's share of the no-frills business in Thailand.
The 51:49 joint venture with Tiger was strongly opposed by the Transport Ministry on the grounds that such a large foreign ownership in the venture would be tantamount to giving a foreign airline domestic routes normally reserved for Thai-owned carriers.
THAI subsequently managed to establish THAI Smile as a replacement airline but only through a full ownership structure to get around the opposition.
This recently proposed code-share agreement, with the airlines sharing the same flight, would be between two very different animals _ a full-service airline and an LCC _ and is seen as very odd.
One difference between the two models is an LCC charges for food and drinks, while on-board meals are included by legacy airlines.
Then there is the matter of AirAsia and THAI operating from two different hubs in Bangkok _ Don Mueang airport for the former and Suvarnabhumi for the latter _ making transit from one airline to another a hassle.
One airline veteran explained that code sharing is usually between airlines of similar service standards and operational commonality.
But Tassapon Bijleveld, TAA's chief executive, yesterday told the Bangkok Post that Mr Sorajak's open-minded attitude should be welcomed.
"His idea of fostering cooperation with us through the likes of a code-share arrangement should be supported. We are open to that possibility," he said.
In the recent meeting with the AirAsia executives, the THAI president spoke with the intention of promoting a united aviation industry in Thailand and not necessarily from the context of marketing, in which each player would still need to compete, said Mr Tassapon.
But the AirAsia boss would not rule out a code-share possibility.
"Who knows? We may have the world's first arrangement of this kind," he said.
Mr Tassapon explained that the scheme could work if both airlines fed each other passengers on routes that the other does not ply, he explained.
A joint AirAsia-THAI committee will be set up to explore possible cooperation inspired by the new environment of friendship, said Mr Tassapon.
Last month, he spoke of boosting TAA's passenger volume by 20% this year to 10 million while strengthening its share in the domestic air travel market to 50% from 37% last year.
About the author
- Writer: Boonsong Kositchotethana
Position: Deputy Editor Business