Kan Air seeks ally to spread wings abroad
After six years in business, the proprietor of Kan Air has decided that joint-venture partners are needed for the commuter airline’s future growth.
Kan Air president Somphong Sooksanguan said continuing as a sole proprietorship focusing strictly on domestic flights with its current equity base would not allow the carrier to soar to new heights.
“Under the existing structure, with me running everything myself, we can’t go very far,” he told the Bangkok Post.
To achieve the ambitious growth that he charted earlier, including fleet enlargement and international flights, Mr Somphong said he would look for joint-venture partners with good capital bases and business support.
The founder of the Chiang Mai-based carrier has sought to lease three ATR 72-500 turboprops and an Airbus 319 narrowbody jet.
Those aircraft would boost Kan Air’s capacity, which is currently being rendered by three aircraft: a 66-seat ATR 72-500 turboprop, a 12-seat single-engine Cessna Grand Caravan 208B turboprop and a Hawker Beechcraft Premier I— a six-seat business jet.
The acquisition of the Airbus will be essential if Kan Air is to spread its wings internationally for the first time.
“We aspire to fly to neighbouring countries such as Myanmar, China and India,” said the 49-year-old businessman from Phatthalung province.
Operating solely domestic flights entails fierce competition characterised by low fares and yields. The market is further subject to regulatory controls and the effects of government decisions, such as the Jan 25 rise in the excise tax on jet fuel from 20 satang a litre to 4.89 baht, said Mr Somphong.
The tax hike, which applies to domestic flights, is one of the factors prompting Kan Air to reconsider the viability of only operating domestically, he said.
“International flights can command higher fares and returns than domestic flights, for more or less the same flight distance,” said Mr Somphong.
Kan Air is holding talks with two prospective joint-venture partners. One is a tourism-related entity from China and the other has been identified only as a Thai investor.
Mr Somphong has not set any prerequisites for the planned joint ventures or the size of the holdings.
“Basically, I am open to everything which makes business sense and allows Kan Air to grow,” he said.
But he aims to finalise the joint venture plan in the next several months to enable the ambitious fleet expansion plan, international service launch, as well as the proposed establishment of a flying school in Thailand by year-end.
Kannithi Aviation, which operates Kan Air, was registered with 200 million baht in capita — the minimum limit set by authorities.
Kannithi Aviation is part of Kannithi Co, one of Thailand’s top-three debt management service providers and the business from which Mr Somphong built his diverse portfolio.