Non-stop Asia-us Flights Cause A Headache For Thai

[peter991]

Source

Thai Airways International (THAI) is stuck in a quandary. The non-stop flights to the United States have been operating at a loss despite the high load factor on each flight.

This has been creating problems for THAI executives with options such as terminating the services, using stopovers or changing to a more economical aircraft model not really able to stem the losses that the route is making despite achieving 80 to 90 per cent load factor on each flight.

“Our US flights are not doing so well and we are taking a hard look to find a good way out,” said THAI president Apinan Sumanaseni.

It has been suggested that the Bangkok-New York flight could include a stopover in major Chinese cities such as Beijing or Shanghai while the Bangkok-Los Angeles flight could stop in South Korea.

But such an option still does not guarantee that the airline could recoup its losses because the price competition on Asia-US flights among international carriers has been fierce. This is mainly because THAI is not the only airline operating these routes at a loss – it has been reported that Singapore Airlines’ Singapore-New York non-stop flight is also in the red.

As one executive commented: “Whatever way you choose, non-stop or with a stopover, you don’t make money.”

[Florin]

Hmm...an obvious solution would be to just increase fares, because it does seem like extra people can't help them. Though in this case their competitiveness might suffer...

[old wanderer]

Very interesting.....I bought a Business class ticket on Thai for LAX/BKK non stop. The ticket purchased about 4 months in advance was $1000 less than NWA and $2000 than my favorite airline Cathay Pacific.

Go figure

[Scott]

Well, they could just fill the plane with all those wonderful street vendors that everyone loves so much. They could then cruise the aisles selling everything from somtam to fake rolex watches. The airline, to make ends meet, must get a cut of the action.

Also remember, it's not polite to step over someones head on your way to the restroom, even if they are sitting in the aisle selling crap!

[Old Man River]

I wonder how Korean Air is able to justify their Seoul/US flights, as their fares are very competitive.

[Soju]

The fuel costs are MUCH higher to do it as a nonstop rather than a onestop. That seems to be a basic problem with the Airbus A340's. Passengers seem to love the plane, but it's just not cost effective to operate unless you charge a large premium, due to the much higher fuel consumption. The A340 business model looked great on paper, but in actual practice it doesn't seem practical. It does though seem like THAI could raise their prices considerably and still sell plenty of seats, being they are the only nonstop between the States and Thailand. But apparantly THAI doesn't think that's enough of a selling point for people to be willing to pay a premium.

[ovenman]

The fuel costs are MUCH higher to do it as a nonstop rather than a onestop. That seems to be a basic problem with the Airbus A340's. Passengers seem to love the plane, but it's just not cost effective to operate unless you charge a large premium, due to the much higher fuel consumption. The A340 business model looked great on paper, but in actual practice it doesn't seem practical. It does though seem like THAI could raise their prices considerably and still sell plenty of seats, being they are the only nonstop between the States and Thailand. But apparantly THAI doesn't think that's enough of a selling point for people to be willing to pay a premium.

I haven't priced it lately but Singapore Airlines was charging roughly a 50% premium for the cheapest ticket on their similar non-stops to both Los Angeles and New York, compared with their connecting service (using the same equipment as THAI on the non-stop, I believe).

[peter991]

That's an interesting point, Soju.

The fuel costs are MUCH higher to do it as a nonstop rather than a onestop.

. I would have thought landing fees would have made it more economical to fly direct between Thailand and USA, than have a stop-over.

Peter

Edited February 28, 2007 by peter991

[Mahout Angrit]

That's an interesting point, Soju.

The fuel costs are MUCH higher to do it as a nonstop rather than a onestop.

. I would have thought landing fees would have made it more economical to fly direct between Thailand and USA, than have a stop-over.

Peter

Interesting !.... yes I always thought that less fuel was used as altitude increased. Taking off must use the most fuel on a litre/mile ratio. You would also be lucky if the stopovers were in line with the great circle direct route. So staying at altitude would suggest fuel costs would be cheaper. Edited February 28, 2007 by Mahout Angrit

[Thai-Spy]

Every airline has certain routes which are marginally profitable, break even or run in the red. The latter serve as loss leaders and are viewed as providing other benefits such as promotion and prestige, or are maintained as long term investments for times when other economic factors change. Suffice it to say that when the situation involves a flag carrier or national airline, the prestige angle weighs more heavily, especially for a country which depends heavily on tourism.

Thai's primary problems have very little to do with one or two routes. Bad management, corruption, corporate debt, and a bloated workforce all contribute.

As long as people are willing to be shoe-horned into aging 747s and spend an extra few hours in transit to save a few hundred bucks, the non-stop model has no real viability.

[lomatopo]

There seems to be some concensus that SQ is also losing money on their direct, non-stops to LAX and EWR. These long, thin routes are a real gamble. Airbus had the aircraft and some carriers thought that there would be enough traffic to support the premium to save ~ 4 hours. I think the market has proven the error of their ways? Even if the planes were filled to 100% it is not clear if they could break even?

Not sure if TG can find a face-saving exit strategy on this one?

TG's (direct, non-stop) flights are relatively poorly timed with connections to their Star Alliance partner, UA. UA does have a decent presence at LAX but has been slowly receding from JFK.

They should probably just serve the west coast with one-stops and get more engaged with UA (SFO/LAX/LHR/FRA), LH (FRA/MUC) via co-marketing (codeshares) agreements.

[onebir]

The fuel costs are MUCH higher to do it as a nonstop rather than a onestop.

Echoing Mahout Angrit's points, I thought it was the other way round too: with a stop the plane has to use extra fuel to take off & gain altitude twice - and may also have to fly a less direct route. Also there are doubled landing fees and turnaround time.

On the other hand, I can see that the average weight of the fuel the plane has to carry is a lot lower with a stopover - half for a stopover exactly halfway through the journey - which would improve fuel efficiency somewhat.

It'd be nice to see an explanation of how all these factors work out.

[britmaveric]

Non-Stop Rocks!!! Granted most people look for cheapest flight, so non-stop is secondary.

[pedro01]

I have flown on the direct and indirect flights on Thai, I have to say that the new airbus is like a limo. The business class seats are amazxingly high tech, bizarrely though - the premium economy seats are more comfortable for me.

All in all - my preference would be an A340, premium economy with a stopover in Narita or Osaka. I used to like getting out of the plane to stretch my legs & also the chance to buy some Japanese snacks at the airport.