Thai Airways to lose market share from Vietnam
Facing intensified competition from the local Vietnamese carrier and newcomers, Thai Airways International Plc is expected to lose at least a 30 percent share on routes connecting Vietnam with European destinations.
Nond Kalinta, general manager of THAI's Hanoi office, said Vietnam Airlines, one of its key competitors, recently started to operate direct flights to major European destinations including Frankfurt and Moscow from Vietnam.In addition to the existing 11 flights a week, the airline will next week add San Francisco as a new destination. As well, competition for the flights from Vietnam is heating up with new players entering the market, including Singapore Airlines.
"Fare wars have already led to a cut in prices. For example, the cost of a roundtrip flight connecting Bangkok with Hanoi is only $129, or about 5,100 baht," Mr Nond said.However, one casualty of the intense competition is Air France, which according to Mr Nond plans to cease its three weekly flights from Vietnam and close down operations in the country.
Europe has been the main market for THAI's Vietnam office especially flights to Frankfurt. The national airline carried more than 7,000 passengers last year for both inbound and outbound routes to the German destination.THAI has been operating in Vietnam for 10 years and has raised the number of weekly flights to the country from one to 14.
Last year, the THAI's Hanoi office accounted for 53 percent of total revenues of the carrier's Vietnam operation of over 200 million baht, 46 percent came from the Ho Chi Minh office, and the rest from Danang which was closed in September last year.To tackle the current situation, Mr Nond said THAI would add new destinations, starting with Chiang Mai and some European locations.
"We're studying whether to implement the the strategy through THAI or Nok Air (THAI's recently launched low-cost airline)," he said.As well, collaboration and joint promotions with alliances or partners will be formed. For example, THAI has cooperated with the Tourism Authority of Thailand to promote Vietnamese tourist arrivals in Thailand during the Thai Food Festival which is scheduled to be held in Chiang Mai in June.
At the same time, THAI is focusing on cost reductions partly by recruiting more Vietnamese staff to replace Thais.
By Nareerat Wiriyapong - The Bangkok Post - March 29, 2004
|