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Competition heats up in Thailand's skies

BANGKOK, Jan. 29, 2014 /PRNewswire/ -- Intense competition from entry of new players in to the market, struggling national carrier and volatile political climate is impacting Thailand Aviation immensely in the short term. And given the imminent impact of ASEAN agreement, the time lost at this juncture could be critical for Thailand businesses.

Ravi Madavaram, Aerospace & Defense consultant from Frost & Sullivan said that, "ASEAN has triggered a mad rush by different airlines to reach all the major markets in the region – Indonesia, Singapore, Thailand, Malaysia, Vietnam and Philippines. But the latest zone of significant market activity is seen in Thailand. This is predominantly because there has been no major LCC airline which was founded in Thailand apart from Nok Air. Indonesia has Lion Air, Singapore has Tiger Air, Malaysia has AirAsia and Philippines have Cebu Pacific. This lack of home grown regional LCC has left the market open for LCC's from elsewhere."

AirAsia has been in Thailand for a decade, almost at the same time when Nok Air came into existence. However, AirAsia has been the dominant player in the region and Nok Air limited itself to compete in Thailand. Recent entry of Lion Air, Thai Airways internal challenges, Bangkok Airways growth plans, launch of NokScoot and AirAsia X entry contribute to the challenging times ahead for airlines in 2014.

"AirAsia is expected to see immense competition in the regional LCC market from Lion. Nok Scoot will compete with AirAsia X. Nok Air will see domestic LCC competition from AirAsia and Lion Air. Even though Thai Airways focuses on long haul full service market, due to its cost structure, top management issues and increased competition from middle-east airlines, Thai Airways will have a challenging 2014," he added.

With so much seat capacity being added in the market, the yields are going to fall significantly in all routes. Price wars will be prevalent throughout the year to gain market share by each player. Nok Air and NokScoot are expected to take a hit as they will be slow to respond to market compared to AirAsia and Lion Air. But the war to look out for will be between Thai AirAsia and Thai Lion. Thailand will be the battle ground before they move onto the bigger platform of ASEAN.

He commented that, "The one player who has not entered this market is Tiger Air, which has taken a different approach to ASEAN compared to AirAsia or Lion Air. Tiger Air formed alliances with home grown LCC's in most of the countries – Cebu Pacific in Philippines, Mandala in Indonesia, Spicejet in Indonesia. Lack of home grown LCC's in Thailand limited the options that Tiger could explore. However this could be a blessing in disguise for Tiger as it could avoid all the challenges in 2014 and enter Thailand at a later stage."

"With the political unrest, the air travel demand is expected to decrease which will only intensify the market concentration. Whatever the strategies of different airlines are, 2014 is going to be an interesting year for aviation in Thailand," he said.

Further information or interview, please contact

Sasikarn Watt
Corporate Communications – Thailand, Frost & Sullivan
Tel. +66 2 637 7414
Email: sasikarn.watt@frost.com

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