THAI Clarifies the Acquisition of New Aircraft

Following newspaper reports alleging that Thai Airways International purchased aircraft at a cost higher than the actual market price, THAI clarifies certain points in order to provide accurate information to the public.

Under the normal process of aircraft purchased, the aircraft manufacturer is required to propose an initial cost to customers or airlines. This cost is referred to as the Aircraft Basic Price and comprises:

- Base Air Frame Price

- Special Features

- Engine Price

The Aircraft Price also depends on the cost of Buyer Furnished Equipment for similar type of aircraft. However, the Base Air Frame Price and Engine Price for customers are standard. The customer's requirements for Special Features and Buyer Furnished Equipment, such as seats and interior decoration, are relatively similar, and therefore, the proposed costs forwarded to different customers or airlines are not markedly different.

The aircraft manufacturer is also required to propose a concession fee to customers or airlines, which is unique to each customer. This varies with the terms of agreement between the manufacturer and customer, such as the number of aircraft ordered at any given time, the current market situation and trend for both the manufacturer and customer, and special conditions, for example, being a launch customer. Therefore, there are several factors, which may play an important role in determining the cost of aircraft, including the delivery date of the aircraft and requirement for special features.

Thai Airways International confirms that the plan to acquire and purchase aircraft has been conducted according to the rules and regulations set by the company as a State Enterprise. These aircraft have not been acquired at a higher price when compared to other airlines. The purchasing of new aircraft is in accordance with the company's long term plan 2000/01- 2004/05, which received approval from THAI's Board of Directors, the Transport and Communications Ministry, Finance Ministry, the National Economic and Social Development Board, and the Cabinet, respectively. The decision on the selection of aircraft types and models is left to the discretion of THAI's Board of Directors.