Bangkok Airways Plc has announced a greater focus on aircraft maintenance and duty-free business to boost corporate performance as the aviation industry becomes more competitive.
The airline believes the duty-free business will continue to grow as international tourist arrivals keep increasing in Thailand.
Maintenance, repair, and overhaul (MRO) services are a new and growing opportunity here, as a result of the healthy growth of the aviation industry, especially low-cost airlines in the region.
Puttipong Prasarttong-Osoth, president of the airline, said the company plans to join duty-free concession bidding once the bid details are announced.
Earlier this year Bangkok Airways formed a new business unit called More Than Free Co to operate duty-free businesses. This subsidiary operates small duty-free shops at Samui, Surat Thani and Luang Prabang airports.
"This is considered medium-scale in the duty-free sector, but we believe tourism growth will drive this sector," Mr Puttipong said.
The airline is in talks with duty-free operators in France and Germany to join the upcoming bid called by Airports of Thailand.
Bangkok Airways recently bid to operate duty-free concessions at U-tapao airport, but was beat out by King Power International Co for the 10-year concession.
For the MRO business, the airline will soon seek investment privileges from the Board of Investment for a plan in line with government's initiative to build an aviation city near U-tapao airport, part of the Eastern Economic Corridor.
Bangkok Airways' first MRO service centre is operated from Don Mueang airport. It is also investing in a second MRO centre at Sukhothai airport, which is expected to open in 18 months.
Each year, Bangkok Airways spends 160-200 million baht for aircraft maintenance and repair. Having more MRO services will help reduce overall operating costs.
"These two new projects will help reduce risks amid more intense airline competition. Clearly, the airline business yield has been dropping gradually," Mr Puttipong said.
He said an increase in fuel costs makes operations more difficult, while diversification helps reduce risks.
The airline also wants to expand its regional and domestic network in the coming year.
A new route from Bangkok to Nha Trang in Vietnam is scheduled to begin in January, with four flights per week.
Bangkok Airways is considering increasing frequencies for Bangkok-Da Nang next year, while a Chiang Mai-Krabi route is expected to commence in April 2019 with seven flights per week.
The airline plans to seek 24 aircraft over the next six years. The new planes will be replacing 24 aircraft that have lease contracts that are close to ending. The company will own 60% of new aircraft, while 40% will be leased.
In the third quarter, the airline had total revenue of 7.06 billion baht, up by 2.8% from the same period last year.
The majority of the revenue was contributed from airport-related businesses. The average passenger load factor was 66.1%. Passenger revenue per kilometre was 4.65 baht, strengthened from the third quarter of 2017 by 7.2%.
For 2019, the airline predicted that passenger numbers will increase 1% and yields will also go up by 1% from this year.
The average load factor is expected to increase three percentage points from an estimated 60% this year.