Thai budget airlines consider temporary operations halt

The founder of One-Two-Go, a Thailand-based budget carrier, is approaching the point of having to take a difficult decision.

Udom Tantiprasongchai is considering the possibility of discontinuing flight operations to control the severity of loss that has come about from a decline in demand and a significant increase in fuel costs.

”I’m not lying to myself about the reality of the situation. A painful decision needs to be made,” he commented.

One-Two-Go is one of three no-frills carriers based in Thailand, and in the past year all three have struggled with rising operating costs driven by fuel costs that have doubled in that one year.

Nok Airlines, one of the three no-frills carriers, is 39% owned by Thai Airways. It is also facing financial difficulties, having lost 114 million baht since July of 2007. Shareholders have allowed Nok to continue operating after management recently committed to downsizing and cutting the salaries of senior staff.

Nok hopes to be at a break-even point by the end of 2008, and be in the position to turn a profit by the end of the first half of 2009.

Thai AirAsia is doing whatever it can to curtail its losses this year, and has adopted some unconventional practices to boost revenues and to keep its seats filled – even when it means operating at no profit. Chief executive Tassapon Bijleveld is hopeful that the carrier’s losses are lower than they were in 2007.

www.orientthai.com