S'pore, Bangkok battle for hub status

S'pore, Bangkok battle for hub status

SINGAPORE (AFP): Southeast Asian carriers Singapore Airlines Ltd. (SIA) and Thai Airways International (THAI) will meet this week amid controversy over which country should hold the status of the region's aviation hub within the Star Alliance group.

Officials from both airlines will gather for a two-day meeting in Bangkok from Monday with Germany's Lufthansa AG as a mediator to find ways of cooperation following SIA's entry into the Star Alliance on April 1, officials said.

"Whether we like it or not, there are now two hubs existing," THAI president Thamnoon Wanglee told reporters at a gathering in Singapore.

He was here Friday along with other Star Alliance member chief executives to formally welcome SIA as their 11th and newest member.

The main issue is how the two sides can agree on full cooperation with regard to commercial sales, marketing and networking, Thamnoon said.

THAI and SIA are battling for the status of Southeast Asian hub for their home airports for profitable routes between Australia and Europe.

The two airlines also compete on routes to China, Hong Kong and North America.

"We will sit down together and discuss numbers. We will have to discuss the transfer programs together, any overlapping routes, especially Kangaroo routes," Thamnoon said, referring to flight services to and from Australia.

"If we have full cooperation between SIA and THAI, we can capture the market share within this region and beyond ... I think we will have a win-win solution," he added.

But SIA's chief executive officer Cheong Choong Kong said that while SIA was willing to cooperate, competition was also welcomed.

"Competition is good for the partners of Star Alliance even when it is among themselves," said Cheong, adding that SIA thrived on competition.

SIA's appetite to meet bigger players even on the global turf was evident with its 600.25 million-pound (US$954 million) purchase of a 49 percent stake in Britain's Virgin Atlantic Airways last December.

Among SIA and Virgin's plans are the setting up of a cut-price Australian domestic airline to compete with Qantas and Ansett. Ansett is a member of the Star Alliance, while Qantas is in the rival One World Alliance dominated by American Airlines and British Airways.

SIA's entry into the alliance and the meeting this week comes at an especially sensitive time for THAI as the Bangkok government is planning to partially privatise the airline this year.

SIA is believed to be interested in bidding for a strategic stake in THAI. Star Alliance has also said the group would make a bid.

Worried that SIA's entry would hurt THAI, there was speculation that the Bangkok-based airline had mulled the idea of switching to the rival One World Alliance.

But THAI's Thamnoon has insisted it would stay.

The Star Alliance, established in 1997, includes Thai Airways, All Nippon Airlines, Austrian Airlines Group, United Airlines, Lufthansa, SAS, Air Canada, Varig of Brazil, Ansett Australia and Air New Zealand.

Mexicana Airlines and British Midland Airways are scheduled to join later this year.