D-day Approaches For Nok Air

[george]

D-Day approaches for Nok Air

High fuel prices may sink budget carrier

BANGKOK: -- Far-reaching implications of any drastic decision are holding back leaders of Nok Airlines from determining the fate of the budget carrier, which has been hit hard by high fuel prices and falling traffic.

Top management executives representing the airline and major shareholder Thai Airways International (THAI) are due to meet again early next week to make a final decision, following up on earlier talks held on June 10.

Last week's discussions included Apinan Sumanaseni, the president of THAI which holds 39% in Nok Air, and were shrouded in secrecy.

However, an insider who asked to remain anonymous said: ''There aren't many options left for Nok Air's future. A very drastic decision has to be made very soon.''

With jet fuel prices above US$160 a barrel, it did not make economic sense for four-year-old Nok Air to continue, he said, indicating that a shutdown could be imminent.

The low-cost carrier (LCC) business model simply did not work with oil prices at such high levels, he said.

For reasons that were not made clear, THAI was not currently at liberty to dispose of its shares in Nok Air, he added.

The national carrier is Nok Air's largest shareholder and shares resources, offering preferential aircraft leasing rates and aircraft maintenance fees. THAI has been worried about the no-frills carrier's financial status for the past few years.

Some executives have also expressed unhappiness over Nok pursuing strategies that did not complement THAI's operations, and in some cases seemed to represent direct competition.

Demand for domestic air travel, to which Nok Air is confined to operate following its exit from the Bangalore and Hanoi routes, is also slowing.

THAI itself was having its own difficulties with prohibitive fuel prices and slowing traffic demand, the source added. Mr Apinan himself admitted in an interview this week that the national carrier's near-term focus was on survival, rather than growth, as it was struggling to break even.

THAI is scaling down its 10-year business growth plan including a major fleet modernisation that was to include the procurement of 65 new aircraft.

One of the consequences arising from any drastic decision involves Nok Air's 100-plus pilots and more than 200 cabin staff.

Nok Air operates 52 flights a day, with nine Boeing 737 series jetliners, four of them leased from THAI, and one ATR propeller plane.

-- Bangkok Post 2008-06-20

[Martin]

Initially, on the routes that I am familiar with, they got passengers who had previously travelled to Bangkok by bus.

But the upper-level bus operators got new, de-luxe buses and improved their service to win back those passengers.

Then the fares went up, with the price of fuel, and travel with Nok Air became even less attractive.

[yeti]

One of the consequences arising from any drastic decision involves Nok Air's 100-plus pilots and more than 200 cabin staff.

Nok Air operates 52 flights a day, with nine Boeing 737 series jetliners, four of them leased from THAI, and one ATR propeller plane.

They have 10 planes and 100 pilots

[PattayaParent]

Nok Air to Hanoi were great.

A much better service than Air Asia.

[Payboy]

They have 10 planes and 100 pilots

number of pilots needed usually depends on total number of flight hours.....

Edited June 20, 2008 by Payboy

[macduff]

I hope nok air can continue. It will be a sad day if they fold up. I always use them for my internal flights

[britmaveric]

Nice airline - shall be sad indeed.

[bino]

A much better service than Air Asia.

Nice airline - shall be sad indeed.

I concur on both points- Nok has been my preferred domestic airline since they began flying.

[jayjayjayjay]

I do CNX-BKK return very often. I think in three years I used Nok once. They just NEVER offered the best deals. It is always 12Go or AirAsia, and now Thai have a super cheap low season prices. Nok just never had any heart to compete. To me it felt like they were running in the shadow of Thai, by that I mean they were running with the exact same head in the clouds mentality of greater-than-thou. My guess is the management came from Thai airways and had the same cronyism throughout the organisation.

Low cost is cut throat! It needs to be run by used car salesmen to survive! I dont think they had the attitude or mechanism to do so. Thai Inter's complaining about them 12 months ago set in place the well known "krengjai", so how could they compete or be cut throat when big brother was critisizing every move! Poor little bird is dead now!

[dr_Pat_Pong]

Other low cost carriers will also fall over.

[cloudhopper]

Other low cost carriers will also fall over.

And that would be a good thing IMO.

"Fly AirSuperCheap - Now everyone can die"

[Spiny]

I always flew them to Loei when thay had this route going (finished Oct last year) and then Bangkok to Udon Thani. Thought they are ok. Better than Air Asia and Thai. My decision to used them was based on the times of their flights not the airline

By the way, does anyone know if any arilines will be taking on the Bangkok to Loei route in the near future? Seems a shame to have upgraded Loei airport only to close it down again

[lazeeboy]

if these low budget airlines fold i dont think i can go back to buses ,so i wont travel internally very much...

[Thereverend]

Have never flown with Nok, but I have flown with Air Asia many times both international & domestic. I have never had any problem with AA, except being late (an hour) a few times.

I hope AA doesn't fold!!

[jaideeguy]

I just purchased tickets on nok for flight in october and hope that they offer refunds or at least credit towards Thai airways flight. They won't just take the money and run [fly], will they??

[think_too_mut]

One of the consequences arising from any drastic decision involves Nok Air's 100-plus pilots and more than 200 cabin staff.

Nok Air operates 52 flights a day, with nine Boeing 737 series jetliners, four of them leased from THAI, and one ATR propeller plane.

They have 10 planes and 100 pilots

In a fully fledged airline, 1 plane like 777 needs 50 crew members, which is about 3 shifts of 8 hours with some leeway.

Here we see another reason why some are called "budget".

[britmaveric]

Have never flown with Nok, but I have flown with Air Asia many times both international & domestic. I have never had any problem with AA, except being late (an hour) a few times.

I hope AA doesn't fold!!

Don't think they will to be completely honest - do quite a few international routes. Be shocked if they went went under.

[geriatrickid]

Having used NOK, it was no worse or better than TG, just that cabin crew tried harder and smiled. I liked it. However, I was surprised to see the 39% interest by TG. Never knew. Would I be out of line to believe that there would probably be some very expensive underlying service contracts in respect to baggage handling, provisionment of aircraft, fuel and maintenance? No matter how good the crews or management, and I think Nok deserves credit for delivering on its service and reliability vs TG, if there was a drag due to contracts, these guys were doomed. I guess this means that TG benefits once the PAX shift back to TG.

[PeaceBlondie]

Maybe in most of the world, the day of cheap flights will soon die. What do they do with unused aircraft? I suppose the Thai airlines do not have many union members who can demand layoff benefits.

[britmaveric]

Nah cheap flights will still be a plenty, don't panic.

[Rinrada]

Maybe room for Stelios and EASYJET or the crazy Paddy with RYANAIR.......for sure.....

[ding]

Good riddance to bad rubbish.

I wont mourn the loss of that festering bucket of pus airlines one second!

[jetjock]

Nah cheap flights will still be a plenty, don't panic.

That statement my be true for me since I fly for free however for the rest of you out there I can only can wish you good luck in continuing to find cheap flights ! In the US, some airlines are now charging extra for the first checked bag and have even announced that they are going to start charging for peanuts and soft drinks in economy. As long as oil prices stay high or continue to rise, more airlines all over the world will enter into bankruptcy and as the competition becomes less, prices are virtually sure to rise based on supply and demand. The only real hope for continued relatively inexpensive flights is if some sanity returns to this fast rise we have recently experienced in the pricing of oil.

[britmaveric]

Well no worries for me either - fly free most of the time too!! Company perks ya know

[jetjock]

Well no worries for me either - fly free most of the time too!! Company perks ya know

Brit, Yeah, I guess we are some of the lucky ones. The one thing that sadly is bad for all of us is that when airlines look at cutting costs, since they can do little about the cost of fuel or union contract labor cost, they do look heavily at maintenance costs. In the past, some of the airlines here in the US have been caught taking shortcuts on their maintenance and been fined by the FAA however as money gets tighter the problem will probably get worse and I would guess that it will become an even a bigger problem in some of the less regulated countries like Thailand and among the smaller budget carriers.

[GeorgeW]

Other low cost carriers will also fall over.

Agreed, and likely not just "some" but "most" will fold. The heydays of the low cost carriers has ended.

[Gary A]

I always flew them to Loei when thay had this route going (finished Oct last year) and then Bangkok to Udon Thani. Thought they are ok. Better than Air Asia and Thai. My decision to used them was based on the times of their flights not the airline

By the way, does anyone know if any arilines will be taking on the Bangkok to Loei route in the near future? Seems a shame to have upgraded Loei airport only to close it down again

I certainly don't understand what happened to the Bangkok - Loei route. When Nok first started service to Loei, it was hard to get a ticket. The flight was always full. They then added another flight and now they simply stop the service. Supposedly they needed the planes for more profitable routes. ?????????

[britmaveric]

Other low cost carriers will also fall over.

Agreed, and likely not just "some" but "most" will fold. The heydays of the low cost carriers has ended.

There will always be low cost carriers, maybe less and more expensive tickets than previous days, but they still will be there to undercut the standard airlines.

[GeorgeW]

Other low cost carriers will also fall over.

Agreed, and likely not just "some" but "most" will fold. The heydays of the low cost carriers has ended.

There will always be low cost carriers, maybe less and more expensive tickets than previous days, but they still will be there to undercut the standard airlines.

I disagree. You can't say for sure that all the LCC's will disappear but you also can't say that there will always be some. As the price of fuel goes up an airline's fuel bill as a percent of their total operating costs goes way up. The LCC's can only offer significantly lower ticket prices when fuel is a smaller percent of their operating costs but as the percent becomes higher their ticket prices approach the full service airlines. Also as the price of fuel goes up the full service airlines start adopting more and more of the LCC's practices. Most airlines now offer heavily discounted tickets that don't earn mileage that are very competitively priced with the LCC's. If the price of fuel remains very high my guess is that the LCC and full service carrier's business models will effectively merge and we could easily see the term LCC become a misnomer or disappear completely.

[SNGLIFE]

If the price of fuel remains very high my guess is that the LCC and full service carrier's business models will effectively merge and we could easily see the term LCC become a misnomer or disappear completely.

However, before that even happens, there will be a rush of consolidations as marginably viable routes and aircraft are sold off. My guess is that is what the Pres of Thai airways may decide to do with Nok.

Econ 101: Reduction of choices is always bad for the consumer. We will be forced to pay whatever the monopoly wants us to pay; or choose to take the bus.

We use the Nok BKK-Udon route frequently to visit the wife's dysfunctional family. She is spoiled with flying and snubs buses (Ha! Funny in retrospect). Now I have an excuse why we can't go! YAY!