Nok Air rehab centred on China
Beleaguered Nok Air is turning the corner with a recovery plan set in motion and a balance-sheet turnaround is expected this year-end.
Chief executive Patee Sarasin said a spate of problems, triggered by the February exodus of pilots after a bitter organisational dispute that led to a mass cancellation of flights and dented Nok Air’s credibility, is behind the airline.
“We are regaining altitude, pretty much back on course and are ready to move forward again,” he told the Bangkok Post.
The SET-listed budget carrier found the replacement of 14 disgruntled Thai pilots who left earlier this year to be the most critical issue.
A recovery strategy is underway with the first foray into the vast Chinese market taking centre stage, Mr Patee said. There will be further sales and marketing initiatives, including possible collaboration with foreign carriers later this year, he said.
On May 16 Nok Air joined seven other Asia-Pacific airlines to forge what they billed the world’s largest low-cost carrier alliance. The Value Alliance members will complement each other’s operations to drive ticket sales and distribution in a model that is unlike the comprehensive airline alliances adopted by full-service airlines.
The partnership is one way Nok Air hopes to drive revenue, Mr Patee said.
“By the third quarter of this year, our balance sheet should start picking up and we hope to see a profit by the fourth quarter,” he said.
After posting 1.06 billion baht in net profit in 2013, Nok Air slipped into the red with a combined net loss of 1.6 billion from 2014 to the first quarter of 2016.
China appears to be the prime target for future growth as the airline switches focus from Thai domestic routes and limited flights to Vietnam and Myanmar.
Mr Patee acknowledged Nok Air has been slow to enter the Chinese market compared with rival Thai AirAsia (TAA), which has 12 Chinese destinations.
With the May 27 launch of services to Shantou, TAA will have the most connections between Thailand and China of any airline, offering 25 flights a day.
“The Chinese market has shown very strong demand for Chinese travel to Thailand,” he said.
China is by far the largest source for Thailand’s tourism sector, accounting for 8 million visitors last year, with this year’s numbers likely to reach 10 million.
Nok Air aims to launch its first scheduled flights to China this November along with other cities in southern region of that country within a three- to four-hour flight range from its base at Bangkok’s Don Mueang airport, said Mr Patee.
However, the airline began serving a number of China routes over the past year — Bangkok-Hefei, Bangkok-Nanning, Krabi-Chengdu and Phuket-Chengdu — but these all operate as regular charters. He said the charter flights paved the way to upgrade to scheduled flights.
Nok Air expects China may contribute up to 50% of its total revenue over the next five years.
The entry of two additional Boeing 737-800s later this year will strengthen its fleet of such jetliners from 29, allowing the expansion to China.
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