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NEWS UPDATES Asean Affairs        18 March 2011

THAI cuts local fares

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Thai Airways International has introduced a new fare structure for domestic tickets in a bold move to reclaim market share lost to low-cost carriers.

The lower fares, complemented by double mileage points, are intended to lift the flag carrier's share in the domestic air travel market above 50%, from about 35% now.

The new fares, effective from March 15 to Sept 30, are 15 percent lower than the airline's current rates and will be competitive with those of budget airlines, said Pandit Chanapai, executive vice-president for commercial affairs.

The airline also plans to become more aggressive in inter-provincial flights, where it has largely ignored the market potential while low-cost rivals such as Thai AirAsia have exploited the benefits. Phuket and Krabi services are seen as the first candidates.

In addition, THAI plans more ad-hoc promotional campaigns from time to time to make its offerings even more attractive than the ones that it announced yesterday under the theme "well worthwhile and complete service".

According to Mr. Pandit, THAI's full-service offerings including competitive fares, inflight meals and beverages as well as 20-kilogramme baggage allowance, meaning that a passenger receives more value for money than on a low-cost carrier charging a comparable price. Before budget airlines descended into Thailand eight years ago, THAI had almost a monopoly on domestic air travel, commanding an 80% of market share.

THAI did not make or lose money on domestic operations last year. Revenue earned from domestic flights accounted for 12% of its total revenue of about 200 billion baht.

Mr. Pandit said the new fare structure took into consideration rising fuel prices. He said THAI had mechanisms in place to mitigate additional fuel costs, such as fuel supply hedging and imposing fuel surcharges.

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