13 July 2000
Angel Air is at a crossroads and decisions made this week will decide whether it succeeds as Thailand’s second designated airline or slips into oblivion.
One month after Angel Air suspended all services, advisors, at least one of them with strong links to China, have given president Somchai Bencharongkul at least three options.
One option recommended Angel Air resumes flights with a daily service – Bangkok-Hong Kong – by wet-leasing a 299-seat Lockheed 1011 Tristar from local charter airline Orient Thai whose managing director Udom Tantiprasongchai confirmed talks were close to conclusion.
Udom would finance the joint Angel-Orient Thai service under the name Kampuchea Airlines while
possibly giving Angel a share of revenue.
If this option is pursued, Somchai said the new route would start this month. “This is an unprecedented case of two regional airlines co-operating to help each other. We anticipate to start operating the Bangkok-Hong Kong route July 15.”
The daily service will probably run until October and is designed to give Angel Air breathing space to restructure.
Another option on the president’s table involves well-known Israeli tour operator Uzi Vered and an outbound ticketing group known as Open Skies. They have offered to supply Angel Air with a B747 to operate three weekly services between Tel Aviv and Bangkok. The Israeli partners would provide certain production guarantees.
“We had preliminary discussion with an Israeli group concerning marketing cooperation on certain segments. If this is concluded we shall lease an aircraft or utilise an option at hand to start operations,” Somchai said.
The most complicated option has its origins in the head office of China Northern Airlines based in Shenyang. Using the services of its Bangkok-based advisor, Andy Chan of Ever East Group, CNA tabled two proposals in a series of meetings from June 28 to July 1.
A China Northern Airlines delegation of nine executives, including Chan and the airline’s vice-president Wang Peifu, met with nine executives from Angel Air and suggested a simple aircraft lease for two MD90s and two Airbus 300-600s to be supplied by China Northern Airlines.
The alternative proposal recommended the Chinese airline enter into a strategic alliance to manage Angel Air’s flight operations for 10 years. It would pay Angel Air a 10 percent royalty fee based on passenger and cargo revenue.
According to the proposal, China Northern Airlines would base two A300-600s in Bangkok to launch services to Hong Kong, Singapore, Manila and points in China and possibly Dubai. Two MD90s would be based in Bangkok later in the year to start services to the Mekong region.
The Chinese offered to cover all landing and ground-handling costs, fuel, aircraft and related operational costs while Angel Air would pay for sales and marketing costs.
“The options you mentioned are part of several that we have examined. Yet all these options are based, including the China Northern one, on a long-term wet-lease basis to restart our South China routes and possibly expand into other markets like Hong Kong or Manila,” said Somchai.
“China Northern Airlines may become a strategic partner yet we remain open to welcome other partnerships of such nature that allow Angel to reposition itself in the market and expand.”
Such an extensive partnership would require complicated paperwork. Aviation experts said it would start with a standard lease agreement for the four aircraft backed up by airline-to-airline agreements to detail parameters of the strategic alliance, responsibility for payments, royalty, duration, route and policy structure.
There is no evidence to suggest that Angel Air’s CEO agreed to the proposed MoU.
Angel Air notified the Department of Aviation (DoA) on June 1 that it was suspending services to restructure the company and select a more suitable aircraft type for its route network.
Angel Air can suspend its services indefinitely as long as it files notice every 15 days, giving a reason for its continued suspension. In its most recent communication with the DoA, the airline asked permission to suspend its Bangkok-Chengdu and Bangkok-Kunming services until July 15.
On domestic flights, the Ministry of Transport and Communications accepted that the airline could suspend services to Udon Thani and Chiang Mai until October 28.
The DoA said resumption of domestic services was more critical than international flights if the airline is to retain its operating license.
“A deal is in the making and many details have to be worked out. The basic agreement is that we lease one or two A300s, long-term, with an option to buy depending on the lease cost. We may even lease smaller aircraft to resume our regional operations,” Somchai said.