TAAX, NokScoot put expansion on ice

TAAX, NokScoot put expansion on ice

Budget carriers feel sting of air safety woes

Two medium-to-long-haul low-cost carriers, Thai AirAsia X (TAAX) and NokScoot, are freezing their expansion plans until Thailand's air safety deficiencies are resolved.

A Thai AirAsia X A330-300 touches down at Don Mueang airport. The carrier took delivery of the jet, its fifth, in November.

Both airlines will only work towards sustaining their current scale of operations, including routes and fleet sizes.

TAAX director Tassapon Bijleveld and NokScoot director Patee Sarasin singled out the International Civil Aviation Organization's red-flagging of Thailand's civil aviation authority for significant safety concerns as the main impediment to growth.

The ICAO red flag restricts both carriers' entry into Japan and South Korea, which top their expansion lists because of high growth potential.

In the case of Japan, TAAX is not allowed to establish new routes, increase frequencies on existing routes or change the type of aircraft used.

NokScoot, a joint venture of budget carrier Nok Air and Singapore Airlines' no-frills Scoot, is in a less fortunate position: its launch in Japan and South Korea failed to take place before the ICAO's ruling in June.

Executives of both airlines said the freeze would remain until removal of the red flag, which Thai officials suggest could happen by the end of next year.

Once the ICAO issue is resolved, TAAX will reactivate its growth plan with resumption of the service to Sapporo that was terminated in August.

The termination followed three months of operations made possible by TAAX using Malaysian parent AirAsia X's aeroplanes, pilots, crews and airline codes on the Bangkok-Sapporo route.

Mr Tassapon, a founder of TAAX, said the airline exhausted all its means to persuade the Japan Civil Aviation Bureau to relax its rules and reinstate Sapporo flights operated by TAAX's own aircraft.

TAAX last month took delivery of its fifth A330-300 wide-body jet to serve Narita, Osaka, Incheon and Shanghai.

NokScoot has three Boeing 777-200 wide-body jets, mainly operating flights to Singapore, Taipei and Qingdao on the east coast of China.

While Japan and South Korea have shut their doors, China has become a focal point for both airlines to maximise the utilisation of their existing aircraft and keep their business afloat.

Chinese airspace is more open to TAAX and NokScoot in particular and other Thai-registered carriers in general.

The policy has allowed for TAAX to commence regular flights to Shanghai on Oct 1 and for NokScoot to launch Qingdao flights on Nov 25 -- new services that would not be possible if Beijing strictly followed the ICAO guidelines under the red flag.

The Thai authorities' aviation safety shortcomings have dented Nok Air's balance sheet.

The carrier posted a loss in the first nine months of the year of 572 million baht, compared with a loss of 491 million in the same period last year, mainly due to losses incurred by NokScoot.

For the third-quarter of this year alone, NokScoot posted a net loss of 298 million baht, according to Nok Air's filing with the Stock Exchange of Thailand.

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