Thai airlines seek to expand after restrictions lifted

The Thai airline sector is poised to enter a new period of growth as several carriers said they would seek new routes in markets such as Japan and Korea following the lifting of a ‘red flag’ last week on the sector by the International Civil Aviation Organization (ICAO), which gave the Kingdom a clean bill of health.

“These airlines can now grow more aggressively,” Corrine Png, chief executive office of Crucial Perspective, a Singapore-based airline research firm, told Reuters news agency. “The ICAO downgrade had seriously impeded these new entrants’ growth to lucrative markets such as Japan and South Korea.”

She added, however, that growth among the medium-size and budget carriers would mean more competition for national carrier THAI Airways International. Among the carriers that have said they will apply for new routes are Lion Air, Nok Air and Thai AirAsia. Share prices for Thai airlines initially rose an average of 8 percent on news of the ICAO decision before settling back to a five percent uptick.

Prime Minister Prayut Chan-o-cha called the ICAO decision a “turning point” for the Thai aviation industry and said it had restored pride to the country. His government was chiefly responsible for implementing the necessary measures and reforms that resulted in the ICAO lifting the red flag.
“We will likely increase routes and frequencies for China, South Korea, and Japan,” Thai AirAsia CEO Nadda Buranasiri told Reuters.

Headded his airline was studying new routes, including to Hokkaido in Japan, and he hoped to add three or four aircraft to its fleet in the coming year.

Thai Lion was set to take delivery of its first wide-body aircraft, three A330-300s, shortly after the ICAO decision, and said they would be used on routes to Northeast Asia. The carrier’s business plan going forward is to rely less on the domestic market and more on international routes, which are now one third of its operations as opposed to just six percent less than two years ago.

Nok Air’s Vice Chairman Patee Sarasin said his airline intends to apply for new routes in both China and India and expects that within two years 50 percent of the carrier’s earnings will come from servicing those two markets.