Thai Airways' venture may boost profit

Thai Airways' venture may boost profit

Bloomberg Bali

Thai Airways International Pcl, which earns 80 percent of its revenue flying to destinations outside Thailand, said its business of running airports can contribute at least 13 percent to its profit in a decade.

Thai Airways runs the Chittagong Airport in Bangladesh, paying about 520 million taka (US$8.6 million) for the right to manage the facility for 10 years. The Bangkok-based airline can collect landing fees and other charges at the airport.

"In the long run, we save costs because we do our own ground handling," said Thai Airways' vice president Doosdee Smuthkochorn, at a meeting of the Asia-Pacific Economic Cooperation forum's transport ministers.

Like Singapore Airlines Ltd., Malaysian Airline System Bhd. and other Asian carriers, Thai Airways is expanding into new businesses to protect its income from challenges by discount airlines such as Bangkok-based Nok Air Co. and Malaysia-based AirAsia Sdn.

Doosdee did not disclose the revenue the airline expects to earn from Chittagong, which reported a 450 million taka loss in 2003. Five carriers, including Thai Airways and Biman Bangladesh Airlines, use the Chittagong airport.

Thai Airways may submit bids to operate small airports in China and Myanmar, Doosdee said, declining to identify the Chinese airports.

Thai Air, the nation's biggest carrier, also wants to expand its businesses to protect its revenue from competition with foreign airlines when Thailand removes air service restrictions. That would take away limits on flight frequencies, aircraft types and fares, letting foreign carriers and cargo delivery companies such as Emirates and FedEx Corp. increase flights to Thailand and compete with Thai Air.

"It is quite inevitable. If the current players are not careful they will get caught and they will be hurt," Doosdee said. "You have to take precautions and various measures will have to be introduced," he said, without elaborating.

Southeast Asia's aviation industry is being opened to foreign competition. China and Indonesia signed so-called open- sky agreements with the U.S. this month.

Continental Airlines Inc., the fifth-largest U.S. carrier, will soon add routes to Indonesia, the Indonesian Transport Minister Soenarno said this week.

Northwest Airline Corp., the fourth-largest U.S. carrier, may cooperate with PT Garuda Indonesia for a new route to Indonesia, he said. Garuda, Indonesia's biggest carrier, may start flying to New York as soon as next month, Soenarno said. The agreements will allow airlines from the Southeast Asian nation to fly directly to more than 40 U.S. cities.

The APEC countries are the U.S, Japan, China, Mexico, Canada, Australia, Russia, Singapore, South Korea, Taiwan, Thailand, Brunei, Chile, Hong Kong, Indonesia, Malaysia, New Zealand, Papua New Guinea, Peru, the Philippines and Vietnam.