Thailand’s Nok Air to restore domestic capacity but focus expansion on China and India

Thailand’s Nok Air is planning to focus on international expansion over the next two years with a focus on China and India. The primarily domestic LCC needs a bigger international operation to diversify its business, improve profitability and unlock a new phase of growth.

Nok has struggled over the last two and a half years to contend with intensifying domestic competition, leading to losses in 2014 and 2015. A pilot shortage led to even steeper losses in 1H2016 as Nok was forced to temporarily reduce domestic capacity and aircraft utilisation levels.

The airline is confident it can return to profitability in 4Q2016 as domestic capacity is restored and is bullish on its medium term outlook as it grows its international operation. China expansion will be the priority in 2017 followed by India in 2018, which will be served with Nok’s new fleet of 737 MAX 8 aircraft and supported by a potential new Indian partner.

Nok is currently predominately a domestic airline and currently only operates three scheduled international routes – from Bangkok to Hanoi, Ho Chi Minh and Yangon. Nok CEO Patee Sarasin told CAPA recently that two more scheduled international routes are planned for 2016 – Bangkok-Taipei from Sep-2016 and Bangkok-Kunming from Nov-2016.

However neither are entirely new routes. Nok already operates charter flights on Bangkok-Kunming while Bangkok-Taipei is being handed over from sister LCC NokScoot. Taipei, which was launched by NokScoot in Oct-2015, is now served four times weekly with 777-200s and will be down-gauged to Nok-operated 737-800s.

In 1H2016, the domestic market accounted for 84% of Nok’s passengers and 86% of its passenger revenues. Nok flew 3.47 million domestic passengers and 570,000 international passengers (includes charters) in 1H2016.