Thai Airways Stuck With Airbus Jumbo

[george]

THAI stuck with Airbus jumbo

BANGKOK: -- Thai Airways International (THAI) has no other options but to keep its order for six Airbus 380 megajets it wanted to cancel as doing so would lead to huge adverse consequences.

"The best option available for us is to delay taking delivery of those A380s,'' Wallop Bhukkanasut, the chairman of THAI's executive board, said last night.

The flag carrier had earlier sought to terminate the A380 contract or change to another future Airbus model, the A350-1000, as it had come to believe the world's largest commercial aircraft would not be economical to operate.

In the recent negotiations with the European planemaker, Airbus has ruled out those changes and THAI itself has come to realise that the cancellation will result in a legal battle that would have a significant impact on THAI and the image of the country as a whole, something the airline wants to avoid, according to Mr Wallop.

The cancellation would expose the airline to US$700 million in penalty costs _ $300 million in pre-payment for airframes and $400 million for contracts already committed.

"Several contracts involved in the A380s are restricted with absolutely no room for change,'' Mr Wallop told reporters after the airline's board meeting.

THAI is now proposing that the delivery of its first three A380s, each costing $300 million, be put off to 2012 and the remaining three in 2013.

The airline has been contracted to take delivery of the jets in two lots, in October 2010 and June 2011.

"In 2012, global economic conditions should be in much better shape, and so will traffic volume. By then, THAI's cash flow problem should have been resolved and the economic environment improved,'' he said.

THAI will continue to negotiate with Airbus on details of the new proposal but it wants the company to cap the cost escalation in order to minimise the financial impact, he added.

-- Bangkok Post 2009-07-10

[dave_boo]

Wow, just wow.

Tourist numbers are down and with all the talk of other, surrounding, countries shortly surpassing LOS in volume of visitors, wouldn't it be better to take this one on the chin rather than be stuck with 1,8 billion USD tab for plans (and that's not taking into account over-runs on construction, weaking exchange rate, etc)?

Or am I missing something yet again?

[Oberkommando]

It is being kept alive by the Government to the tune of billions and billions of taxpayers' money.

Only a matter of time now before it collapses completely IMO.

As an aside, I just booked a return flight on Air Asia from BKK to KL then MEL round trip less than 8,000thb inclusive. I was quoted 32,000thb for Thai direct in economy, and I usually fly with them on that route, but I've switched allegiance.

[brahmburgers]

Thailand does not have a good record re; gov't controlled transit companies.

Bkk Buses continually in the red

Railways continually in the red

Thai Airways is keeping the tradition going.

How about take delivery, and lease most or all the jets out to other, more profitable airlines.

[baht&sold]

Unfortunately the original Thaksin appointed Thai Airways board (o' cronies;) ordered the A380's to be designed with a configuration which requires break-even passenger loads of 88.8%.

"With THAI's planned configuration of the A380, the airline must fill 88.8% of 501 seats just to break even"

http://www.bangkokpost.com/business/econom...-jumbo-jet-deal

""There is no contract that can't be broken or re-negotiated" said Mr Wallop, who retired as THAI's executive vice-president for commercial affairs two years ago and recently became chairman of the airline's executive board." (Mr Wallop is re-cycled courtesy Mr Newin's Bhumjai toxic Transport Ministry influence, continuing the Thaksin tradition of appointing cronies/team players;)

"THAI may have to extend the service years of its fleet, now averaging 12 years, to 20 years to reduce the expense of procuring new jets, said Mr Wallop. "Instead of buying new planes, we can maintain THAI's appeal by refurbishing the cabins, which costs much less," he said.

Yes, throw lipstick on the ol' 747's, how innovative... (nevermind the increased maintenance costs = easy ongoing cash flow to cronies and nevermind the decreased image of THAI, along with increased risk of ageing aircraft)

Maenwhile, the A380, regardless one of the most fuel-efficient aircraft in the world, an 88.8% passenger load is a non-starter (perhaps they thought Thaksin's 'Elite Card' membership would grow along with his 'desired' target market?)

Regardless, Emirates is flying A380's into Bkk (and Dubai London) since June 1, with reported 85%+ passenger yields (and likely with sensible configurations).

Edited July 10, 2009 by baht&sold

[jackdanielsesq]

When one looks at all the global economic models, almost nothing makes sense, since the big bust.

Certainly, the airline model is one of the worst out there. Robbing Peter to pay Paul is a non starter.

Exorcise the cancer now rather than later, let the lawyers figure it out.

The A380 will never be profitable, the craft is all wrong, the cycle now +35 years, +450 craft, it was

supposed to break even at 200. The 800F has been canceled.

There might even be cause for a class-action suite, which will delay matters further, help many carriers.

A bigger problem is finance/credit availability - the best cop-out of all & ultimate force-majeure

BR>Jack

[AnnAnn]

I flew A380 to London last month, and B777 on the way back. On SQ with my KrisFlyer miles.

I was only in Eco class. I must say the A380 is much much better. I really like the interior, and the large screen TV.

Last year I flew to Sydney with TG. I can't believe that they don't even have TV. I remember my first flying experience TWENTY years ago. SQ already has personal TV back then.

I'm sorry, but I think there is a lot for TG to catch up.

[BusyBee123]

The plane makes sense, shame they have short term bottle merchants leading them, the economy will pick up as usual and profits will be made in the future. However will thai air make a profit ? no idea never flown with them as their prices are ridiculous.

[Datsun240Z]

Airbus made the SO wrong mistake by retiring the concorde and instead built the a380. I hope the a380 lands on a scrapyard! I want to go back to the future. Concorde flew for 27 years without one single accident! , The one in Paris wasn't caused by the concorde itself but by debrie on the runway throwen up by the tires and hitting the fuel tanks.

Edited July 10, 2009 by Datsun240Z

[garyh]

Airbus made the SO wrong mistake by retiring the concorde and instead built the a380. I hope the a380 lands on a scrapyard! I want to go back to the future. Concorde flew for 27 years without one single accident! , The one in Paris wasn't caused by the concorde itself but by debrie on the runway throwen up by the tires and hitting the fuel tanks.

How many times do you see people complianing about the price of plane tickets????? I agree it is a shame that the Concorde has been grounded but it was way too expensive to operate, people are not prepared to pay the extra cost. A380 is designed to move more people at a lower cost per passenger than any other long distance jet.

[torrenova]

Singapore must be flying 380s on fairly heavy occupancy as you can see if you try to book on one of them. Often the 747 to LHR is available and the 380 isn't or the 380 is at a significant premium due to heavier demand.

TG cannot sit on their old, almost pre historic 747s and must upgrade just to play catch up, not to move ahead.

[Wiresok]

Of course it won't be cancelled.

Abi's gang want their cut.

[cdnvic]

Airbus made the SO wrong mistake by retiring the concorde and instead built the a380.

Concorde is not an Airbus product. Airbus had nothing to do with it's retirement.

Do you ever look anything up before making statements?

[cdnvic]

If Thai Airways was smart they'd reconfigure these things for high volume seating and try to entice tons of budget travellers to come to Thailand. Forget about the Thaksin-era dreams of planeloads of wealthy tourists and get back to what works. Another alternative is to sell or lease the A380s to another airline.

[Carib]

Airbus made the SO wrong mistake by retiring the concorde and instead built the a380. I hope the a380 lands on a scrapyard! I want to go back to the future. Concorde flew for 27 years without one single accident! , The one in Paris wasn't caused by the concorde itself but by debrie on the runway throwen up by the tires and hitting the fuel tanks.

Aircraft manufacturers do not retire planes, airlines do, and what did airbus have to do with Concorde anyway??

Edir: oops just noticed cdnvic already said this.

Edited July 10, 2009 by Carib

[zorro1]

Airbus made the SO wrong mistake by retiring the concorde and instead built the a380.

Concorde is not an Airbus product. Airbus had nothing to do with it's retirement.

Do you ever look anything up before making statements?

Concorde never made a profit in its history. Was propped by both B.A and air Fance

[RKASA]

Freight,  turn 4 of them into freighters and ship stuff cheap.  Just try to brake even.  Others can run L.A. and or EU less often but fill them with really cheap tickets, set the best price we won't be under sold.  Buy one get one free what ever just get them working.  They won't earn a thing in the parking lot, and a contract is a contract.  Stop pretenting Thai is a super level of service and go budget airline to SEA   its working out pretty well for eva and china air.

[brahmburgers]

If Thai Airways was smart they'd reconfigure these things for high volume seating and try to entice tons of budget travellers to come to Thailand. Forget about the Thaksin-era dreams of planeloads of wealthy tourists and get back to what works. Another alternative is to sell or lease the A380s to another airline.

I agree - go with what works, even if it's a bit less glamorous.

As it stands, the Thai gov't transport corporations (bus, rail, plane) are being propped up by gov't money. Much of that money, at least 'outside money', comes via resident farang and tourism. So, in effect, farang (like members of Thaivisa) are providing a significant portion of propping up badly run transport systems in Thailand.

Concorde was geared 100% at rich travelers who were willing to pay extra thousands of $$'s to shave a couple hours off trans-oceanic travel time. So, even if the unfortunate crash near Orly airport hadn't happened, the Concorde would have been history. That would be even more true today, considering the present state of world economy, where all, including most rich people, are cutting back on superfluous expenditures.

How about thinking outside the box - by bringing back ocean liners? Sure it's retro, especially in this high-paced world. Yet there's probably a significant % of travelers who would love to take a one week journey across the ocean. I'm not talking cruise ship regalia, but rather a no-frills portage with good food and a smattering of fun activities. Better still, if the ships were powered by renewable energy (wind, solar, methane). Even cooler would be zeppelins / airships.

Ok, won't happen, so I won't go out and buy a mothballed ocean liner anytime soon. Incidentally, it was none other that Ari Onassis (later wed to Jackie Kennedy), who started building his shipping empire by buying two decrepit Liberty Ships and fixing them up. For a time, he was the richest man on the planet. I met him in Majorca, but that's a tale for another time.

Edited July 11, 2009 by brahmburgers

[grantbkk]

If Thai Airways was smart they'd reconfigure these things for high volume seating and try to entice tons of budget travellers to come to Thailand. Forget about the Thaksin-era dreams of planeloads of wealthy tourists and get back to what works. Another alternative is to sell or lease the A380s to another airline.

855 unwashed backpackers each with 200GBP to spend. How do they pay for the airline ticket?

[jonclark]

If Thai Airways was smart they'd reconfigure these things for high volume seating and try to entice tons of budget travellers to come to Thailand. Forget about the Thaksin-era dreams of planeloads of wealthy tourists and get back to what works. Another alternative is to sell or lease the A380s to another airline.

855 unwashed backpackers each with 200GBP to spend. How do they pay for the airline ticket?

With money....

Why does the word backpackers always have the word unwashed before it in Thailand??? When I went backpacking around the world many moons ago I had a shower every morning and night, as did pretty much everyone else I met.

The only time I didn't wash was when the places I was staying were so dirty that washing would have made me dirtier, so maybe that's the answer - washing in Thailand makes you dirtier. - Sorry a bit off topic

[cdnvic]

The "unwashed" (very inaccurate) backpackers who develop a relationship with Thailand at 19 are the ones who will return on their honeymoon in their twenties, family holidays in their thirties and forties, conventions in their fifties and retirement in their sixties, each time increasing their spending. It's too bad that the politicians can't think beyond the short term.

[hazz]

From:

"There is no contract that can't be broken or re-negotiated" said Mr Wallop, who retired as THAI's executive vice-president for commercial affairs two years ago and recently became chairman of the airline's executive board."

To:

The best option available for us is to delay taking delivery of those A380s,'' Wallop Bhukkanasut, the chairman of THAI's executive board, said last night.

In one month!!!. Mr Wallop must have forgotten that thai business rules only apply to thailand; Its equally amaising that after working so long for an airline he didn't realize just how tight aircraft purchase contracts are for both parties. I suspect that we are witnessing airbus rescuing thai international from itsself and the thai government. Now they can go cap in hand to the government for money to buy these things; which might have been the plan all along.

[brahmburgers]

The "unwashed" (very inaccurate) backpackers who develop a relationship with Thailand at 19 are the ones who will return on their honeymoon in their twenties, family holidays in their thirties and forties, conventions in their fifties and retirement in their sixties, each time increasing their spending. It's too bad that the politicians can't think beyond the short term.

Excactly. The biggest TAT news up here in northernmost Thailand is its boosting of one or two golf courses that cater to the elite. Ok, maybe one or two mentions of upper crust spas where you can pay Bt.2,500 to get green clay put on your face.

Here's what they didn't say a peep about:

>>> Sailing/sail-boarding/windsurfing on the wide Mae Kok river (no one has ever done it).

>>> Tubing or rafting down one of the several rivers in the region

>>> Spelunking near town (the tour guides don't know the caves exist).

>>> Rock climbing - there are several excellent crags near town, but TAT doesn't even know the word 'crag,' let alone the appeal of rock climbing to farang.

>>> parasailing - has never happened in northern Thailand, as far as I know

TAT is all about upper crust resorts (now running at about 13% occupancy) golf resorts, overpriced spas, and little else. If Thailand knew what was good for it, it would kick out all the TAT employees and get a whole new generation of fresh-thinking people to showcase Thailand to the world. If they want to see how to do it right, they could take a look at how Malaysia is currently marketing its attractions. It's all nature and adventure sports.

[baht&sold]

Not an expert on CASM or 'Cost Per Available Seat Mile' (cost it takes to fly one seat one mile) but on THAI's A380 configurations, apparently the entire upper deck is first or business class. This may be over-reaching just a tad? Just for starters, who in business class wishes to sit behind the wings?

Perhaps it may have been better to have ordered a configuration consisting of optimal first/business configuration on the top deck seated BEFORE the wings (ala SQ) then 'economy plus' on top-deck behind the wings and economy on lower deck (also perhaps 'economy plus' at the front of the lower deck?)

Regardless, it's probably too late to change the configuration Thaksin era THAI ordered which requires an 88.8% passenger capacity just to break even...

Pictorial of A380's interiors, configurations etc:

http://www.aviationexplorer.com/a380_facts.htm

Perhaps THAI could make THIS profitable??

Edited July 11, 2009 by baht&sold

[brahmburgers]

or do like they do on buses in India; put on a roof rack, and let late-comers hang on however they can.

seriously though, I don't have a good feeling about the mega sized jets.

It's not just the added time required for boarding and exiting. It's partly to do with exiting if/when there's an emergency landing, but mainly something 'je ne sais quoi' about being in a steel tube as big as the Holland Tunnel that fizzes through the air on jet fuel. It's just too dam_n big for my retro self.

I'll take a zeppelin equipped with wax-on wings by the exit door (was that Lazarius who started that trend?). Really though, sitting in wicker chairs alongside large windows, munching cheese and crackers, and sipping ginger ale - that's got to be a better way to go.

Edited July 11, 2009 by brahmburgers

[davejonesbkk]

If Thai Airways was smart they'd reconfigure these things for high volume seating and try to entice tons of budget travellers to come to Thailand. Forget about the Thaksin-era dreams of planeloads of wealthy tourists and get back to what works. Another alternative is to sell or lease the A380s to another airline.

855 unwashed backpackers each with 200GBP to spend. How do they pay for the airline ticket?

With money....

Why does the word backpackers always have the word unwashed before it in Thailand??? When I went backpacking around the world many moons ago I had a shower every morning and night, as did pretty much everyone else I met.

The only time I didn't wash was when the places I was staying were so dirty that washing would have made me dirtier, so maybe that's the answer - washing in Thailand makes you dirtier. - Sorry a bit off topic

Yeah Im getting a bit tired of that sh*t too....when I was travelling here I was showering twice a day exaclty the same as I do now. Also, have you seen modern day 'backpackers'??? They are NOTHING like the stereotype! All have iphones/pods, PSP, laptop, designer clothes etc....

anyway

[jamesjdaly]

THAI prices are set to rise even higher..........yet again!! I refuse to fly with them.

[cdnvic]

The whole thing about high end tourists is about face. Unfortunately its difficult to sell people on paying the same price as Aspen, Whistler, or Monte Carlo, and giving them broken sidewalks, screaming airport touts, and live wires at head level when they step outside the manicured resorts. That all seemed to start with Thaksin. He couldn't accept Thailand for what it was, and wanted to wave a magic wand and make it a first world country, but nobody wanted to do the work required to get there.

[theoldgit]

Concorde is not an Airbus product. Airbus had nothing to do with it's retirement.

No Concorde wasn't an Airbus product but the consortium that built it later became Airbus, and one of the reasons it was retired is because Airbus was no longer willing to service it or provide the parts for others to do so.

Do you ever look anything up before making statements?

I think he probably did.

http://www.concordesst.com/retire/faq_r.html

I was lucky enough to fly on Concorde once from London to New York, fantastic.

[fred2007]

If Thai Airways was smart they'd reconfigure these things for high volume seating and try to entice tons of budget travellers to come to Thailand. Forget about the Thaksin-era dreams of planeloads of wealthy tourists and get back to what works. Another alternative is to sell or lease the A380s to another airline.

855 unwashed backpackers each with 200GBP to spend. How do they pay for the airline ticket?

With money....

Why does the word backpackers always have the word unwashed before it in Thailand??? When I went backpacking around the world many moons ago I had a shower every morning and night, as did pretty much everyone else I met.

The only time I didn't wash was when the places I was staying were so dirty that washing would have made me dirtier, so maybe that's the answer - washing in Thailand makes you dirtier. - Sorry a bit off topic

Never mind being off topic but you are absolutely right. I deal with backpackers and i never encountered a dirty one yet, and how do I know? Because I run a Home Stay!!!