AirAsia to shift to Don Mueang by Oct

Economy June 26, 2012 00:00


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Budget airline Thai AirAsia yesterday announced it would move its base of operation from Suvarna-bhumi to Don Mueang Airport, thanks to attractive incentives.

The news ended a month-long row over its relocation – a move the government was forced to take because of overcrowding at the new airport.

The firm signed an agreement with Airports of Thailand Plc (AOT) yesterday. Its first flight from Don Mueang will take off on October 1 this year.

Tassapon Bijleveld, CEO of Thai AirAsia, pointed out clearly that Suvarnabhumi would be its permanent base and hoped it would be the last time it has to relocate – a move that will cost Bt80 million.

Strategically, AOT Plc had to offer incentives to convince low-cost airlines to relocate from Suvarnabhumi to reduce congestion at the new airport. It has launched incentives for 2012 to 2015, via three steps – a discount of 10 to 30 per cent on landing fees, office rent, check-in counters, rental land and more.

But the AOT moves raised questions yesterday over whether it treated other operators, especially Nok Air, a low-cost rival, fairly, in terms of privileges.

AOT president Flying Officer Anirut Thanomkulbutra said it was clear that incentives were needed to move budget airlines from Suvarnabhumi.

Patee Sarasin, CEO of Nok Air, urged the AOT to treat all airlines as equally as possible. That would help airlines compete fairly, if they had similar operating costs. It would also help attract more airlines to Don Mueang. And the more airlines operating there, the more passengers who would come, he said.

Currently, Patee is in talks with the AOT to reconfigure discounts it will be offered.

Meanwhile, Tassapon said that relocating to Don Mueang would help boost its competitiveness in the market. He expected it would help cut its fuel cost by 5 per cent, and thus save Bt60 billion annually. It would also be a boon for domestic passengers as the airport had easy access to central Bangkok.

Anirut said the AOT would also boost transport connections between the two airports. These will include shuttle buses, service vans, and also a public bus. The firm will seek help from the Bangkok Mass Transit Authority.

According to the AOT, there were a total of 299,566 flights to Suvarnabhumi in 2011, with 47.9 million passengers. But it said the airport had a maximum “capacity” to serve only 45 million people.

Don Mueang, meanwhile, had 40,903 flights in 2011, with just 3.4 million passengers. However, the airport can accommodate 36.5 million passengers annually.

Anirut said moving low-cost airlines to Don Mueang would help reduce congestion at the new airport by shifting about 25 per cent of flights each year. The AOT plans to talk to a further 14 airlines, mainly foreign, to move to Don Mueang.

At present, AirAsia has 160 daily flights. Some 55 per cent of them are domestic and the rest are regional. The airline carried 8 million passengers last year and expects to double that to 16 million by 2016. It currently has 24 A320s and will get three new A320s by the end of this year. By 2016, it hopes to have a fleet of 48 aircraft.

Tassapon said that meant a take-off or landing every seven minutes for AirAsia in 2016. If the airline does not move now, it would create more congestion at Suvarnabhumi.