Nok Air to add two jets, spread wings: Domestic network to be expanded

Feb 25, 2009 (Bangkok Post - McClatchy-Tribune Information Services via COMTEX) -- TAWNF | Quote | Chart | News | PowerRating -- Having recuperated from its financial woes, the no-frills carrier Nok Air is resuming its cautious growth plans with the addition of two jetliners and an expanding network.

The airline is negotiating with a few aircraft leasing firms for two Boeing 737-400s to join its fleet of three similar jetliners leased from its parent company, Thai Airways International (THAI).

The two additional twin-jet narrow body aircraft are expected to commence service for Nok Air before mid-year, allowing the airline to expand its domestic network, according to Nok executive vice-president Sehapan Chumsai.

Nok Air is pondering three options including raising frequencies on its existing routes, reviving dropped routes or introducing new ones like Chiang Rai.

The airline reckoned that three jets were insufficient to cope with domestic traffic demand.

Mr Sehapan described Nok Air's resumption of Bangkok-Phuket flights on Feb 20, after a suspension since September last year as part of its corporate rehabilitation, as heralding a revival of growth for Nok Air. Phuket was the sixth destination for Nok Air after Chiang Mai, Hat Yai, Nakhon Si Thammarat, Trang and Udon Thani.

A fleet of five Boeing 737-400s was regarded as the optimum size before it underwent a rehabilitation after recording cumulative losses of more than 200 million baht.

The airline was hard hit by the global turmoil, which sunk air travel demand and worsened the effect of spiking oil prices, while its own over-expansion contributed to financial woes.

Last year, it downsized by shedding nearly half its workforce of 1,000, halved its Boeing 737 jet fleet to three, terminated all overseas routes, slashed flights by half and cut salaries.

Like a phoenix, Nok Air returned to the black starting in October and earned 82 million baht in the final quarter of last year.

With an improving balancing sheet, the budget carrier now expects to clear its cumulative loss in June of this year.

"We have learned our lessons. Whatever step we take must be precise and produce yields," Mr Sehapan noted.

Domestic air travel demand has not been slowing as widely feared. "There is still some growth, probably 5 percent, and we can make a profit out of it."

Nok Air expects to carry two million passengers this year due to substantial capacity cutbacks, down from 2.5 million last year, with an average load factor of 80 percent, up from 75 percent in 2008.

The existing staff of 120 cabin attendants and 55 cockpit staff is meant to handle a five-aircraft fleet, he stated, adding that last year's downsizing was based on the assumption that the airline was to operate five jetliners, each spending eight hours a day in the air.

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