Nok Air and China Airlines have entered into joint ventures with Singapore-based Scoot and Tigerair respectively to establish two new low-cost carrier (LCC) brands.
The Nok Air and Scoot LCC will be branded as NokScoot, and will be based out of Don Mueang International Airport. As part of the agreement, Nok Air will own 51 per cent of the new airline, while Scoot will have 49 per cent. The initial investment of NokScoot will be THB2 billion (US$62 million).
Interestingly enough, the new LCC will operate widebody aircraft and serve medium and long-haul international routes. The use of the LCC model on long-haul flights has been a hotly debated topic, with many believing that long-term profitability is not sustainable. For a more in-depth look into this, click here for “The long game” feature in the December issue of Business Traveller Asia-Pacific.
In addition, Thailand has become an increasingly competitive market for LCCs, due to the growing number of budget airlines operating out of the country. It will therefore be interesting to see NokScoot's strategy in such an environment.
The airline's launch is still subject to regulatory approval, so there is no estimated start date yet. Details about NokScoot’s fleet, products and route network, meanwhile, will be announced at a later date.
Meanwhile, the LCC by China Airlines and Tigerair will be branded as Tigerair Taiwan. With operations expected to commence by the end of 2014, the new airline will be the first LCC brand to be operated out of Taiwan. The budget airline market in Mainland China and Taiwan remains at a nascent stage compared to many other Asian regions. Shanghai’s Spring Airlines is the only China-operated no-frills carrier, while 12 foreign budget airlines offer services to and from Taiwan.
Preperation of Tigerair Taiwan will begin immediately in accordance with the regulations of the Civil Aeronautics Administration. The initial investment will be NT$2 billion (US$68 million), with China Airlines holding a 90 per cent stake and Tigerair 10 per cent.
Fleet details have yet to be confirmed, but the network will cover major destinations in Northeast and Southeast Asia, Hong Kong, Macau, China and Taiwan.