Asian budget airlines plan share sales to grow

Jan 26 | Updated: Jan 27 2005, 05:30am hrs
Four of the 11 low-fare carriers that fly in Southeast Asia and India said they are planning initial public offers of their stocks in the next two years, tapping funds to expand as the regions air travel grows.

Indias Air Deccan plans to raise as much as $300 million by September 2006, selling at least a quarter of its stock to buy planes and extend its routes overseas, said Managing Director G.R. Gopinath. Singapores Valuair Ltd., Bangkok-based Orient Thai Airlines Co. and Nok Air Co. said they are also aiming to raise funds in the next two years by selling shares.

Southeast Asia is going to be the region with the most growth in the world, said Sarit Panjarnano, an analyst at KGI Securities (Thailand) Pcl in Bangkok. Greater easing of aviation policies will lead to more air traffic from India and China.

The four airlines are following the Oct. 29 stock sale by Malaysias AirAsia Bhd., Southeast Asias biggest discount carrier, which raised 863 million ringgit ($277 million) to buy new planes. With increasing affluence in the population of China and India, the demand for air travels has increased. Easier traveling rules in China and India are also letting more citizens fly abroad for business and leisure.

Orient Thai, which operates Thailands largest discount carrier, plans to sell at least a quarter of its stock, the Bangkok-based airlines Chairman Udom Tantiprasongchai said today in Singapore. Nok Air, owned by Thai Airways International Pcl, is considering an initial public offering in late 2006, Chief Executive Patee Sarasin said today.Valuair Ltd., one of three discount carriers based in Singapore, is also looking at an initial offer, said its Chief Executive Sim Kay Wee, without giving a time.

AirAsia, the first low-cost carrier to fly in Southeast Asia, offered the stock to individual investors at 1.16 ringgit a share, with institutional investors paying 1.25 ringgit apiece. AirAsia shares fell 0.6 percent to 1.81 ringgit at 3:25 p.m. in Kuala Lumpur.

Growing Demand
Asias demand for air travel is expected to expand at least 10 percent this year, according to a forecast by Sydney-based Centre for Asia-Pacific Aviation, which advises the regions governments on aviation policies. Increasing number of Chinese and Indian travelers, from the worlds two most populous nations, will lead the growth in demand, said the centers managing director Peter Harbison.

Well see double-digit growth on a lot of Asia-Pacific routes this year, particularly those due to the influence of low- cost carriers coming through, Harbison said on Monday at the Asia Pacific & Middle East Aviation and Travel Outlook conference in Singapore.

At Singapores Changi Airport, Asias sixth-busiest, low- fare carriers flew 7 percent of the 3,700 weekly flights. Besides Valuair, Singapore Airlines Ltd.s Tiger Airways Pte. and Qantas Airways Ltd.s JetStar Asia also base their flights at Changi.

Expanding Fleets
Air Deccan, based in south-central Indias Bangalore city, plans to increase its fleet to 17 aircraft this year, with the capacity to expand its daily services to 100 flights.

Orient Thai, which began flying in December 2003 using the One-Two-Go brand, offers low-fare flights in Thailand and operates full-service flights to South Korea, Hong Kong, Singapore and Malaysia.

The Bangkok-based airline plans to more than double its fleet this year to expand domestic and international flights. The airline will lease 15 planes in 2005, three of them from Boeing Co., Udom said. He said the remaining 12 will be medium-sized planes, without giving details.

Orient Thai is planning to set up a wholly owned budget airline in Hong Kong, Udom said, without giving details. It will resume flying to Hong Kong from southern Thailands Phuket on Feb. 1, Udom said. The service was halted after the Dec. 26 tsunami destroyed tourism facilities on Phuket.

Nok Air
Nok, which means bird in the Thai language, flies to five destinations in Thailand, including the Phuket resort island in the countrys south.

Bloomberg