Thai Airways cleared to move on $15bn fleet renewal programme

In an important development yesterday Thai Airways International received clearance from the Thai government to decide on its own the manner in which would like to acquire new aircraft, instead of being compelled to buy all of them through a dictat by the ministry for transport.

That means the national flag carrier reserves the right to purchase and/or lease 75 aircraft over a 12-year period under a 457.12 billion baht ($15 billion) budget it was seeking.

The ruling was a slap in the face for the transport ministry, which had strongly advocated that the new fleet of aircraft be purchased. The ministry has been at odds with Thai over several major issues including control over expansion plans or new ventures.

Thai president Piyasvasti Amranand said the airline should acquire new jets through a combination of leasing or buying as the airline's cash flow and debt situation warranted. Purchase of aircraft was seen as being capital intensive, creating large debts which could be a big burden over the airline, while leasing incurred operating costs which could be spread out over the contract period.

The cabinet's approval finally allows Thai, burdened with a large fleet of ageing, inefficient aircraft, to move ahead with its long-awaited fleet renewal programme, one of the largest of its kind in Asia.

The programme is expected to allow it to compete with leading international airlines.