The deregulation of air services in Thailand has resulted in the emergence of six secondary and low-cost airlines -- Bangkok Airways, PB Air, Phuket Air, and Thai AirAsia, (subsidiary of AirAsia), Nok Air (subsidiary of Thai Airways International), and One-Two-Go (subsidiary of Orient Thai). Each plays a major role in offering access to some of Asia's exotic new destinations.

Collectively , these airlines now fly from Bangkok to captivating cities like Luang Prabang in Laos, Da Nang in Vietnam, Bagan in Myamnar, Jinhong in China, Siem Reap (gateway to the famous Khmer temple complex of Angkor Wat) in Cambodia. Other destinations , like Port Blair and Varanasi , are due to come on line as charters , with the possibility of becoming scheduled services in the future.

Secondary and low-cost airlines are typically those that are not considered national carriers, such as Thai Airways International, Singapore Airlines, Malaysian Airlines, Cathay Pacific in Hong Kong and Qantas in Australia . While these mainstream airlines continue to 'fly the flag' on international long-haul sectors, secondary and low-cost airlines are seeking to carve out a market niche by linking hundreds of small Asia-Pacific cities which have airports , but to which mainstream airlines cannot fly due to high costs which make such routes unprofitable.

In Thailand, the pioneer secondary airline was Bangkok Airways which owned its own airport on Samui island and has played a major role in developing tourism in that island resort. Another airline, Angel Air, began operating in 1997, but encountered turbulent weather , due to the 1997-98 economic crisis , and suspended operations soon after.

Today, regional aviation authorities are encouraging the growth of these airlines because they are smaller and have lower operational costs. By flying to the many secondary cities, they help promote tourism, trade and economic development. This, in turn, meets the goals of national governments to spread prosperity to rural areas, and create job opportunities in order to reduce migration to , and congestion of, Asian mega-cities.

'No Frills' and 'Low Cost' largely mean the same. Airlines employing such designations maintain low costs by relying less on travel agents and global distribution systems. Most bookings come direct via the Internet. Some offer no free meals on board; they have to be paid for. They also want airport operators to provide lower landing charges , and other forms of cost-relief to help boost route profitability. However, they have strict booking conditions, including no changes once the booking is made , and no refunds in case of cancellations, making it imperative that travellers read all the fine print before making their bookings.

Low-cost does not necessarily mean low-value; it simply means that the passenger pays for the basic service of being transported from one point to another , safely and punctually. Everything else is a 'frill' and needs to be paid for accordingly.

Not all secondary airlines come under the low-cost classification. Some stick with conventional distribution channels via travel agents. They offer in-flight meals as well as other regular services of mainstream airlines. Regardless of how the airlines position themselves, fares always depend on the level of competition on each route -- the more competition , the lower the fares. The laws of supply and demand apply in the aviation industry as much as elsewhere .

Winds of change throughout the Thai and Asia-Pacific aviation industry mean that travellers have more choices available. This 'democratisation' of travel has relegated the Thai aviation industry to the same status as other means of transportation, like bus and rail services. New airlines are making air travel available to people who have never flown before. As fares fall, new destinations open up, which might otherwise have had a tough time establishing themselves on the global tourism map.

Huge opportunities open up for intra-regional and domestic travel by millions of people. It is widely forecast that people will travel more frequently and more impulsively to destinations served by low-cost airlines. Long weekends will become gold-mines on the calendar , and reasons for travel will become increasingly tied to the pursuit of individual whims and fancies. Niche segment stakeholders such as spas and golf course operators, dive site operators, shopping and culinary destinations or just simply rest- 'n' -relax resorts are likely to benefit.

INTRODUCING THE PIONEERS AND EXISTING PLAYERS:
BRAVING THAI SKIES

	BANGKOK AIRWAYS Bangkok Airways, which began as an air-taxi service in 1968, currently operates flights to 14 destinations in Thailand, Singapore, China, Cambodia, Laos and Vietnam. It has more than 40 flights a day from its home airport of Samui to Bangkok, Phuket, Pattaya (U-Tapao), Krabi and Singapore. It also flies 49 times weekly between Bangkok and Siem Reap, gateway to the historic Angkor Wat complex , and 14 times weekly between Bangkok and Phnom Penh. The airline has the competitive advantage of owning its own airports in Samui, and Sukhothai and Trat provinces , each extremely desirable beach and cultural destinations. The three airports number amongst the most distinctive in Asia; stylish architecture reflects the spirit of the local people, their culture and environment. As of February 2004, the airline has repositioned itself as 'Asia's boutique airline' and announced a policy to distinguish itself from the others via a 3-in-1 strategy focusing on the airline, airports and destinations (natural & cultural) together with continuous commitment of providing safe, punctual service. It is avoiding the low-fare, low-frills war, but is making increasing use of e-ticketing.
		PB AIR 'Thailand's great little airline' Founded by Thai beer baron Dr. Piya Bhirom-Bhakdi in November 1990, PB Air has positioned itself as 'Thailand's great little airline.' On the domestic sectors, as of the winter 2003/4 schedule, PB Air was flying between Bangkok and Lampang, Phetchabun, Krabi, Nakhon Si Thammarat, Roi Et, Nakhon Phanom and Sakhon Nakhon, all routes that have been or are being gradually phased out by Thai Airways. The airline will operate a charter flight to Port Blair, in the Andaman Islands, India, in March. PB Air has worked out a code-share agreement with Thai Airways International and is flying between Bangkok and Luang Prabang (three flights weekly) and Danang (thrice weekly). It is also flying to Bagan (thrice weekly) and awaiting approval from the Myanmar aviation authorities for a code-share with THAI on this route.
		PHUKET AIR In southern Thailand, Phuket Air was established in January 2001. After strong initial plans, it has undergone route restructuring. As of the 2003-4 winter schedule, it was operating just three sectors from Bangkok to Krabi (14 flights weekly), Ranong (seven flights weekly), and Phuket (seven flights weekly). From 29 January until 28 February 2004 , it also operated charters from Bangkok to Buriram and Mae Sot as well as between Chiang Mai - Chiang Rai - Udon Thani. The airline briefly operated an international charter flight between Bangkok and Bodh Gaya, India, until 23 February , 2004.
		ORIENT AIR The last airline, Orient Thai, has experimented over the years with various business plans and models, beginning as a domestic a carrier, before operating cargo, charters and international routes. In 2003, it set up a no-frills subsidiary, One-Two-Go which, as of March 2004, is flying twice weekly from Bangkok to Chiang Mai.

The most recent entrants are the Malaysian airline AirAsia and its Thai subsidiary, Thai AirAsia, which broke new ground with its low-fares, no-frills concept. AirAsia first began operating on sectors like Kuala Lumpur - Phuket during November 2003 and Johor Bahru - Bangkok in December 2003.

	THAI AIRASIA According to Thai AirAsia's Chairman Boonklee Plangsiri, about 80 million people travel within Thailand annually; only 7 million travel by air. Of those numbers, the airline is targeting approximately 1 million during the first year. Thai AirAsia's CEO Mr Tassapon Bijleveld said three strategies are being pursued for establishing routes: 1) key routes first targeting those who have never flown before; 2) routes not served before , like Chiang Mai to Phuket direct; 3) routes on which fares are high. After Thai AirAsia was established, it commenced domestic services in February from Bangkok to Chiang Mai, Haad Yai, Phuket and Khon Kaen, and operated international flights to Singapore and Kuala Lumpur. In a well-publicised launch, the airline offered 20,000 seats at a promotional fare of 99 baht one-way to all of its four domestic destinations. Never before done in Thailand, the offer was snapped up in just 3 days. Major means of distribution is its web site; foreign visitors can make bookings from abroad before they come to Thailand -- though they must be careful to read the fine print; the airline gives no refunds, and after payment has been processed, no changes of names, dates or flights are permitted.
		NOK AIR To compete with Thai AirAsia, the national airline , Thai Airways International PCL , has set up its own low-fares, no-frills subsidiary called Nok Air. 'Nok' means 'bird' in Thai. It is also an extremely popular Thai nickname. Nok Air is 39 % owned by THAI, the remainder by the Crown Property Bureau, the government-owned Krungthai Bank, private investors and Dhipaya Insurance. With two Boeing 737-400s, it plans to start flights in June 2004 from Bangkok to six key destinations: Chiang Mai, Khon Kaen, Udon Thani, Phitsanulok, Phuket and Had Yai. While the main distribution and sales channels will be its own web site and call centre, the airline plans a link-up with the 7-Eleven chain of convenience stores, thousands of which are located all over Thailand.

Secondary and low-cost airlines are well-placed to succeed in Thailand, largely due to the kingdom's unique competitive advantage -- a geographical location in the heart of the Mekong region , and the 10-member Association of Southeast Asian Countries (ASEAN), as well as being within four hours flying time of some of the most important Chinese and Indian urban centres.

Thailand boasts 36 international and domestic airports. Major ones, serving the country's economic and tourism centres, are Bangkok, Phuket, Chiang Mai, Chiang Rai and Had Yai. Provincial airports like Udon Thani, Ubon Ratchathani, Khon Kaen, Phitsanulok, Mae Hong Son, Surat Thani and Krabi also report growing passenger movements.

As Thailand's airports are being gradually privatized , and will be competing to attract users, more opportunities will open up for the airlines and tourism industries, especially if they can boost route profitability by carrying perishable export products as cargo.

However, in the final analysis, the future of Thailand's airlines will depend more on external factors, like SARS, bird flu, terrorism, currency fluctuations and economic and political turmoil, all of which make people stay home and affect the travel and tourism industry at large.

OVERVIEW OF THAI AVIATION

Thailand's moves towards aviation liberalisation began in 1995 , when the government amended long-standing policy to allow more than one national flag carrier. In 1997, the privately-owned Angel Air became the second designated airline but almost immediately hit an air-pocket in the form of the 1997 Asian economic crisis.

In 1998, the Thai government further liberalised regulations by allowing domestic airlines free competition on all routes , except Bangkok to Phuket, Chiang Mai, Had Yai, and free competition on all international routes , except those served by the struggling Angel Air. Two years later, in 2000, domestic air services were totally deregulated and liberalised, with a similar policy taking effect for international air services in 2001. By then, Angel Air had called it a day.

Progressive aviation deregulation in Thailand has mirrored similar policies being pursued by Asia-Pacific governments as they seek to better integrate their economies through regional and sub-regional free-trade agreements. As there can be no trade without transportation, aviation growth is a critical factor, especially in an area divided by large tracts of water.

Name:	Bangkok Airways Co., Ltd. (PG)
Positioning:	Asia's boutique airline operating scheduled domestic and international routes
Year Founded:	1968
Fleet:	3ATR 72-200s, 6 ATR 72-500s and 4 Boeing 717-200 twinjets. Two Airbuses on order.
Destinations as of the 2003-4 winter schedule	Domestic: From Bangkok to Samui, Phuket, Krabi, Trat, Sukhothai, Chiang Mai. From Samui to Krabi, Phuket and Pattaya (U-tapao) International: From Bangkok to Phnom Penh, Siem Reap, Guilin, Jinghong and Xian. From Samui to Singapore.
Web site:	http://www.bangkokair.com

Name:	PB Air Co., Ltd. (9Q)
Positioning:	Secondary airline, not necessarily low-cost or low-fare
Founded:	1990
Fleet:	Embraer 145 LR and Boeing aircraft
Destinations as of the 2003-4 winter schedule	Domestic: From Bangkok to Lampang, Phetchabun, Krabi, Nakhon Si Thammarat, Roi Et, Nakhon Phanom, Sakhon Nakhon. International (Code-share flights with THAI Airways International): From Bangkok to Luang Prabang, Danang and Bagan
Web site:	http://www.pbair.com

Name:	One-Two-Go
Positioning:	no-frills subsidiary of Orient Thai Airlines
Founded:	2003
Fleet:	Boeing 757s
Destinations as of March 2004	From Bangkok to Chiang Mai
Web site:	http://www.orient-thai.com

Name:	Phuket Airline Co., Ltd. (9R)
Founded:	January 2001
Positioning	Low fare but full-frills
Fleet:	Three Boeing 737's and one NAMC YS-11's
Destinations as of the 2003-4 winter schedule	Domestic: Bangkok to Krabi, Ranong and Phuket
Web site:	http://www.phuketairlines.com

Name:	Thai AirAsia Co., Ltd. (AK)
Founded:	12 November 2003
Shareholding:	Tune Air Sdn Bhd Malaysia (49 %) and Shin Corporation Thailand (50%) and 1% share by other Thai investors .
Positioning:	Low Fare, No Frills
Fleet:	Boeing 737-300s
Destinations from Bangkok:	Singapore, Kuala Lumpur, Chiang Mai, Khon Kaen, Phuket and Hat Yai.
Web site:	http://www.airasia.com

Name:	Nok Air Co., Ltd.
Founded:	2004
Positioning:	Low-fare, low-cost airline
Shareholding:	39%-owned by Thai Airways International PCL, Crown Property Bureau, Krungthai Bank, private investors and Dhipaya Insurance.
Fleet:	Two Boeing 737-400s
Destinations:	As of planned launch in June 2004, from Bangkok to Chiang Mai, Khon Kaen, Udon Thani, Phitsanulok, Phuket and Had Yai.
Web site:	www.nokair.com