AIRLINES / OPEN SKIES AGREEMENT

BOONSONG KOSITCHOTETHANA

Thai Airways International and US airlines are likely to be cautious for the immediate future about cashing in on the newly liberalised air traffic agreement signed by Thai and American authorities and allowing more frequencies and new routes. One of the constraints hindering the effectiveness of the Thai-US open skies aviation pact is the need for Thailand and the US to secure the rights from Japan to make more stopovers in the destination countries, as well as providing for landing and takeoff slots at the jammed Narita airport near Tokyo for flights to the US west coast from Bangkok.

Most of the trans-Pacific flights bound for the US west coast by US and Asian carriers stop over in Japan for refuelling, picking up more passengers and cargo before continuing the journeys.

Thailand is still negotiating a similar open skies agreement with Tokyo, whose positive result will clear the way for an increase in flights and more choices of destinations between Thailand and the US.

The other constraint is that passenger and cargo volume between Thailand and the US is not expected to increase fast enough to encourage either THAI, the designated Thai airline, or the two US airlines operating to Thailand _ Northwest and United Airlines _ to plan more frequencies and routes in the near future.

The right to pick up passengers and cargo in Japan _ the ''fifth freedom'' in international airline parlance when speaking of a third country such as Japan _ is crucial to justifying additional flights and routes to the US, industry experts said.

An industry source familiar with the Thai-US aviation market, said neither Northwest nor United plan to expand operations beyond today's offering _ a daily flight on board high-capacity long-range jets _ which seem to meet demand.

Northwest and United are entitled to increase frequencies from Bangkok to the US via Narita to a total maximum of 21 flights a week under the existing Thai-US agreements, from the current 14.

On the other hand, THAI, the only Thai carrier currently capable of flying to the US, wants to concentrate only on its two US routes from Bangkok _ four weekly flights to Los Angeles via Osaka's Kansai airport, and the non-stop New York flight begun last May, six days a week.

After it ran up a loss of 4.77 billion baht for the quarter that ended last June, the Thai carrier has put its long-range plans to introduce new US destinations _ Chicago, San Francisco and a non-stop service to Los Angles _ on the back burner.

''Our focus is to make the Bangkok-New York flight work (financially),'' said a senior THAI executive.

Nor are there any indications of an interest in flights to Bangkok by the three US carriers which operate trans-Pacific flights to Japan. American Airlines, Delta and Continental are entitled to fly on to Bangkok under terms of the new Thai-US open skies agreement, but industry experts say this is unlikely for now.

''The business opportunities (on the Thailand-US routes) may not present themselves to those airlines at least in the near future,'' one said.

However, the new US-Thai agreement, to be officially announced later this week when Prime Minister Thaksin Shinawatra meets US President George W. Bush in Washington, will be instrumental in allowing air traffic between the two countries to grow with minimal government intervention on routes, capacity, frequencies and fare pricing in the future.

The guidelines of the agreement, which were approved by the Thai cabinet on Tuesday, call for a progressive increase in flight frequencies via a third country before the accord takes full effect in 2010.

The US has established open skies pacts with more than 70 countries and territories. Thailand is negotiating agreements with seven countries including India, South Korea, Switzerland and Uzbekistan.

By Bangkok Post On 15 Sep 2005

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