Thai Airways Seeks To Exit Loss-making Routes

[george]

THAI seeks to exit loss-making routes

More opportunities for smaller carriers

BANGKOK: -- Thai Airways International is prepared to scale down its domestic services by pulling out of loss-making routes and handing them over to other local airlines in order to concentrate on more lucrative international flights.

Representatives of the national carrier raised the idea with executives of six other local airlines _ Bangkok Airways, Orient Thai Airlines, Thai AirAsia, Nok Air, Phuket Air and Air Andaman _ at a meeting on Friday evening. The meeting had been called to discuss ways of co-operating at a time of sharply rising costs.

The routes that THAI is ready to give up are secondary ones such as Mae Hong Son, Trang, Krabi and Nakhon Si Thammarat, though it would continue to fly trunk routes such as those from Bangkok to Chiang Mai and Phuket to complement its international services.

``They (THAI executives) told us that those routes are not worthwhile to operate and would rather have them served by other local operators whose costs are lower and their operations are more flexible,'' an executive who attended the meeting said yesterday.

Though THAI has been under intense political pressure, particularly from local MPs, to retain the low-traffic routes, the airline's management has shown strong determination to drop operations that have been in the red and concentrate on international services.

Giving up the routes would reduce competition and make them more appealing to other carriers that are theoretically allowed to ply the same routes as THAI under a domestic ``open skies'' policy.

However, one operator said some of the routes, such as Mae Hong Son, were not attractive in terms of traffic volume.

THAI now flies to 13 domestic cities, offering 140,000 seats and 334 flights a week. The airline has the capacity to carry more than eight million passengers a year.

A new sense of co-operation has emerged among local carriers and THAI has made it clear that it is prepared to play a leading role in an effort to ensure that the entire industry survives the current challenges.

The position is sharp reversal from THAI's earlier stance, which was less than accommodating toward other operators.

One step agreed on last Friday was for airlines to transfer passengers on certain carriers affected by flight delays or cancellations to other carriers promptly through a pre-agreed billing system.

Such co-operation has already been in place on a limited bilateral basis, between One-Two-Go and Thai AirAsia, and between Thai Airways and its budget affiliate Nok Air.

Another agreement in principle involves arranging flight schedules so that they are not fixed too closely together, allowing each flight to take a full load.

The operators will hold another meeting to work out ``pooling schedules'' and discuss further co-operation under what one meeting source called as ``friendly competition''.

THAI carried 13.55 million passengers and filled 70.5% of its seats in the first nine months of its current financial year that ends on Sept. 30. That compared with 14.75 million passengers and a 71.7% passenger load in the same period a year ago.

THAI shares closed yesterday on the Stock Exchange of Thailand at 40.25 baht, up 25 satang, in trade worth 5.29 million baht.

--Bangkok Post 2005-08-02