Thai Air moves on Thai Tiger deal

Thai Airways International (THAI) made a preemptive move to sign a joint venture agreement with Tiger Airways to set up the Thai offshoot of the Singapore-based low-cost carrier (LCC) ahead of the Transport Ministry's nod.

The flag carrier announced a shareholder agreement yesterday to establish Thai Tiger Airways Co Ltd (TTA) in order to get the controversial plan off the ground, even as the Transport Ministry frowns upon the deal.

THAI signed the accord last Friday after the State Enterprise Policy Office (Sepo) of the Finance Ministry said the proposed joint venture did not violate an act governing private sector partnership with the operations of state agencies, an issue raised by the Transport Ministry. THAI president Piyasvasti Amranand said in a statement yesterday the airline has forwarded Sepo's clarification to the ministry.

Earlier, the THAI board had resolved the airline would sign the TTA joint venture after the ministry endorsed the deal. However, a joint statement issued by THAI and Tiger Airways yesterday said the incorporation of TTA would occur after necessary investment approval was granted by Thai authorities.

Once TTA Co is incorporated, a formal application for an Air Operators Certificate will be lodged, it said.

Under the joint-venture agreement, THAI is to hold 49.9 percent in TTA with unnamed Thai individual shareholders holding 1.1 percent.

Tiger Airways will hold 39 percent in TTA and RyanThai, the holding firm of Ryanair, the Irish LCC that is also a shareholder in Tiger Airways, has a 10 percent stake. TTA has been stalled ever since the original memorandum of understanding (MoU) to set up the airline was signed on August 2 last year.

The MoU has been renewed three times as the Transport Ministry has found faults with the TTA plan and required THAI meet more requirements, much to the frustration of Dr Piyasvasti, who last Friday branded the ministry's action "unethical".

THAI said it gave the ministry the required information and it was looking at the documents. It noted RyanThai will be represented on the TTA board by Declan Ryan, one of the founding shareholders of both Tiger Airways and Ryanair.