One-Two-Go Airlines, one of Thailand's three main budget carriers, will cease operations temporarily, starting on Tuesday, to allow time for a financial restructuring.
The decision for a 56-day grounding followed mounting cost pressures spurred by ballooning oil prices, fierce competition from rival airlines, falling domestic passenger demand and the poor business outlook.
One-Two-Go, which started flying in December 2003, is the first no-frills carrier to suspend operations, while the other two operators, Thai AirAsia and Nok Airlines, are also experiencing difficulties but have yet to make a similar decision.
A One-Two-Go statement issued yesterday said that during the suspension, from July 22 to Sept 15, the airline will consider a new financial system that will do away with forward ticket sales which have hurt its financial status.
Forward sales of air tickets have become a critical problem for most airlines as the tariff is priced when oil prices are lower but by the time travel actually takes place they have tended to rise.
There may also be a need for it to put in place a new service model to differentiate One-Two-Go from other low-cost carriers, it said.
One-Two-Go founder and chairman Udom Tantiprasongchai could not be reached for comment as he was overseas.
Earlier, Mr Udom told the
Bangkok Post that the suspension was part of what he termed "damage control."
He declined to comment on how One-Two-Go had been affected by the airline industry downturn, except to say, "We are financially maintainable".
It was not clear yesterday how the airline would deal with its 700 employees, passengers who have bought tickets, and its fleet of eight MD 80 series jets.
Mr Udom's plan to suspend One-Two-Go was also influenced by a sense of betrayal by fellow low-cost carriers which earlier agreed to adopt a survival package to weather the storm but failed to honour it
Parent carrier, Orient Thai, will continue flights to
Hong Kong and
Incheon.
