Nok to add 14 jets to support growth plan

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Nok to add 14 jets to support growth plan 
Bangkok Post: 5 Oct 2010
Nok to add 14 jets to support growth plan
International routes to resume in 2012

LONDON : Nok Air is expanding its fleet as part of a growth plan that includes the resumption of international services in 2012-13.

Patee: Steadily and cautiously Nok grows

The budget airline plans to lease four B737-400 jets and four ATR 72 turboprops in the short term, with six larger and more capable B737-800 aircraft to follow in the long term.

The carrier's largest fleet expansion since its founding in 2004 forms part of an effort to consolidate its domestic market presence and to relaunch regional flights, which were halted three years ago.

Nok Air now operates six B737-400s and two ATR 72s. The jets are used close to their maximum capacity, at 90%, leaving little flexibility for adjustment.

Chief executive Patee Sarasin said the airline would continue to grow "steadily and cautiously" over the next few years, primarily by focusing on the domestic market.

The earliest Nok Air will resume international services is 2012 with destinations within a three-hour flight from Bangkok.

"We are not going to expand aggressively like AirAsia. Our mission is to set a strong foothold within in Thailand, which still offers considerable business opportunities," he told the Bangkok Post on the sidelines of the World Low Cost Airlines Congress in London.

Nok Air will continue to be mainly a domestic airline, with Thais making up 80% of its passengers.

It has reached agreement to lease two B737-400s, one from Dublin-based AWAS and the other from GE Capital Aviation Services, the commercial aircraft financing and leasing business of GE. The airline is in talks to lease the two other B737-400s from other companies.

The four B737-400s are expected to start service for Nok Air between this month and February next year. By about March, Nok Air will have four additional ATR 72s operational.

Six 737-800s are expected to enter Nok Air's service toward the end of next year to form part of its upgrade to more advanced jets. They will replace some of its older 737-400s, including those being leased from Thai Airways International (THAI).

By 2012, Nok Air will operate 12 jets and six ATRs, according to Mr Patee.

Over the next two years, Nok Air targets growth by increasing flight frequency and capacity on domestic trunk routes, such as those to Hat Yai, and by flying to smaller cities.

Nok Air will not necessarily take over secondary routes from THAI. "We have taken enough routes from them and would rather now develop our own," Mr Patee said.

[size=12]In March, Nok Air took over two of THAI's loss-making routes - Bangkok-Phitsanulok and Chiang Mai-Mae Hong Son - while handling most flights between Bangkok and Ubon Ratchathani,

The national carrier, which owns 39% of Nok Air, had wanted to offload flights to Chiang Rai, Khon Kaen, Krabi, Surat Thani and Hat Yai to Nok Air under THAI's so-called "two-brand strategy".
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Mr Patee remained positive that Nok Air, which was on the verge of financial crisis a few years ago, would post a net profit of as much as 700 million baht this year, with revenue of 3 billion baht.

But next year the budget airline expects a lower profit of some 200 million baht, despite an anticipated rise in revenue to nearly 4 billion baht, because of the likelihood that jet fuel prices will increase to about US$95 a barrel.

The International Air Transport Association estimates that jet fuel prices will average $88.2 this year.

Mr Patee made clear that Nok Air would not welcome foreign ownership, saying "it's absolutely clear that we want to keep Nok Air as a Thai entity".

Although Nok Air will be eligible for listing on the Stock Exchange of Thailand next year because of continued profitability, Mr Patee said: "Whether we're going to do it right away is another question. It's not a priority."

He told the London conference last week that budget airlines must be able to operate independently from parent carriers. He said Nok Air must not be a "slave airline" to THAI, citing its resistance to THAI's demand for Nok Air to assume its loss-making Bangkok-Penang route.

http://www.bangkokpost.com/business/aviation/199719/nok-to-add-14-jets-to-support-growth-plan