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.