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LCCs Brace For More Competition
2nd Jul 2013
Nok Air and Thai AirAsia and Orient Thai could soon find themselves in a four-way competition for the budget travel market with the possible entry of Indonesia's largest low-cost carrier, Lion Air.
Lion Air made headlines in March this year when it placed an order from Airbus company for a total of 234 aircraft valued at a catalogue price of $24 billion. Previously, it made similar headlines in 2011 when it surprised the aviation industry by placing an order of a record-setting 230 aircraft from Boeing company worth $22 billion. That brings to a massive 537 planes on order from the world's two largest jet manufacturers.
Lion Air currently has a total of 92 aircraft in its fleet.
The low-cost carrier first showed interest in entering into the Thai domestic market six years ago but never materialized for undisclosed reasons.
Recently, rumor mills have it that the budget carrier is revisiting its original plan to enter the country with the establishment of a local subsidiary, Thai Lion Air.
Though the Civil Aviation Department of Thailand confirmed the rumor, it stressed, however, that they still haven't received any application for a permit to operate from the airline.
Reports have it also that despite the absence of an official permit from the authorities, the airline has already started its recruitment activities for its ground staff, pilots and even flight crew.
The airline is looking forward to base its operations at the old Don Mueang Airport and will initially deploy 6 Boeing B737-800 aircraft for the maiden routes.
The Civil Aviation Department of Thailand foresees that the entry of Lion Air into the country will heighten the competition in the domestic market.
According to Woradej Harnprasert, Director-General of Civil Aviation Department, more competition in the domestic market will certainly benefit local travelers as airlines will naturally lower their tickets to attract customers.
Also in the offing is the entry of another new airline, Thai VietAir, which is a joint venture between a Vietnam-based VietJet Aviation and Thai commuter airline Kan Air.
The new Thai-Vietnamese joint venture will further widen the competition in the Thai domestic market possibly lowering further the airfares making air travel in the country more affordable that will undoubtedly fuel demand.
VietJet Air is Vietnam's first privately-owned carrier and commenced operations in December 2011. It operates on a license under a low-cost model launching its maiden international service out of Ho Chi Minh to Bangkok on February 2013. In June 1 of the same year, it launched its once-daily Hanoi-Bangkok service.
The Thai VietJet Air is set to commence operations later this year on domestic routes using a couple of A320 aircraft.
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