Phuket Air lays off 300 after huge losses

[george]

Phuket Air lays off 300 after huge losses

BANGKOK: -- With revenue losses estimated at Bt500 million, Phuket Airlines has laid off about 300 employees since April.A sharp rise in fuel costs and bad timing in the expansion of flights to foreign destinations like London and Amsterdam have been blamed as the main factors behind the carrier’s financial woes.

Chawanit Chiamcharoenvut, executive vice president of the airline, said the steep rise in fuel prices had increased operating costs 30-40 per cent, while the airline had to pay fixed costs on aircraft leases, office rents and staff salaries.

Last year, Phuket Air posted a loss of Bt300 million.

The drastic staff cutbacks have reduced its workforce by a third, to 600 employees.

The airline has also introduced further cost-saving measures, such as closing its offices in Phuket, Hat Yai and Krabi and reducing the space it rents at Don Muang International Airport. The airline will instead beef up its direct-sales operations, including Internet-based bookings.

Yesterday, Chawanit sought help from Thailand’s Department of Civil Aviation (DCA) after France’s Civil Aviation Authority barred Phuket Air and five other international carriers from entering French airspace, because of increased safety concerns in the wake of several plane crashes worldwide in the past month.

Chawanit said Phuket Air had been certified as safe by the DCA and that it had been operating without any technical problems on its aircraft since April, after the carrier solved disagreements with British and Dutch aviation authorities.

One airline source said Phuket Air had obtained rights to fly into France but that the safety concerns raised by the French authorities were hampering the Thai carrier from doing so. Phuket Air’s plans to extend its routes to Moscow this year and Sydney early next year might also have to be postponed, because of the financial difficulties.

To lessen the financial backlash from sky-high oil prices, the airline recently increased its fuel-surcharge rate to customers by Bt610 per round trip on domestic and Bt1,040 on international routes. “This saves the airline Bt20 million a month in operating costs,” explained Chawanit.

The airline currently operates three domestic routes – between Bangkok and Buri Ram, Mae Sot and Ranong – and one regional route between Bangkok and Rangoon.

Chawanit said the airline was planning to boost operations during the current high season by increasing its flights to Mae Sot and Ranong from the current five per week to seven. It will also add two more flights to its current seven per week to Buri Ram.

Phuket Air is considering adding a flight between Chiang Mai and Udon Thani three times a week in October, while doubling the weekly flights between Bangkok and Rangoon to four a week.

--The Nation 2005-08-31

[ovenman]

Any doubts aside about Phuket Air's safety, I've always wondered about an airline that amongst its only half-dozen or less routes, operates Bangkok-London and Bangkok-Mae Sot. Seems like a bit of an operational disconnect there.

[george]

Phuket Air to quit struggle to stay aloft

Four-year battle ends in bad image, lawsuits

BANGKOK: -- Hit by a spate of bad publicity, a poor public image and soured overseas business partnerships, Phuket Airlines has decided to make a soft landing _ ending most scheduled flights, ceasing charter operations and leasing nearly all of its fleet including the nine Boeing 747 jumbo jets.

Vikrom Aisiri, founder and president of the privately owned carrier, said yesterday he would virtually throw in the towel after a four-year struggle to keep flying in a hostile operating environment made worse lately by soaring fuel costs.

The frustrated Mr Vikrom, who is also a Thai senator, said the company was preparing for the "soft landing" to limit further losses and troubles. He said he looked back on four years of prejudice, negative perceptions from authorities, the media and even some members of the public, at home and overseas.

The latest blow came on Monday when the civil aviation authority of France listed Phuket Airlines among six carriers banned from its airspace for safety reasons.

Phuket Airlines was forced to suspend its short-lived scheduled inter-continental flights from Bangkok to Amsterdam and London, after a series of incidents. The low point came when some passengers claimed they saw "flames and sparks" from a Boeing 747-200 taxiing for takeoff after refuelling last April 3 from Sharjah in the United Arab Emirates, a stopover on the Bangkok-London route.

The airline has now resolved to stop chartering its aircraft, a common alternative used by airlines to generate cash from otherwise idled aircraft. That is because of the ongoing bad experience from their general sales agents (GSA) in South Korea and Bangladesh.

"It's too troublesome. We learned our lessons in a very hard way and [we] don't want to get involved anymore," Mr Vikrom told the Bangkok Post.

One of the airline's Boeing 747-300s has been impounded at South Korea's Incheon International Airport since Aug 10 over disputes involving the local GSA, the TV Club Travel.

After one dispute was settled, the Incheon District Court ordered the seizure of the jet as it was about to take off on Aug 19 on a request by TV Club, which filed a lawsuit claiming $1.2 million in damages from Phuket Airlines for losses on planned charters from Seoul to Bangkok. The airline suspended the operation in July after 30 flights, mostly in June. The last flight was to take place on Aug 10, the day the plane was first seized.

When Phuket Airlines attempted to fly its plane back to Thailand, the International Airport Corp, which runs the airport, stopped the flight until the airline coughed up $230,000 in cash for aircraft support and service fees including fuel and catering bills that were actually owed by TV Club Travel.

The second suit has grounded the plane ever since.

In Bangladesh, the airline has continued to try to clear the claims for "several crores of taka" its local agent owed to the Civil Aviation Authority of Bangladesh and Bangladesh Biman Airlines for bills including aircraft handling. (One crore is 10 million taka, equivalent to about 6.35 million baht.)

Mr Vikrom said he intends to lease all nine Boeing 747-300s _ five in service and four others undergoing maintenance _ and some of its smaller aircraft including one Boeing 737 and two S-11 propeller-driven airliners, to "reputable and reliable" airlines under a so-called "wet lease" agreement.

A wet lease contract means that Phuket Airlines will supply the aircraft, along with cockpit officers, cabin crew and airplane engineers. The aircraft will be repainted in the lessee's livery.

Three of Phuket Airlines' 747s are already under wet lease to Saudia Airlines, on Middle Eastern routes.

He said Phuket Airlines would "very soon" drop two of its three domestic services, from Bangkok to Buri Ram and to Mae Sot in Tak province.

It will retain only its daily flight from Bangkok to Ranong in order to support his Andaman Club resort business in the southern province.

That would leave Phuket Airlines operating only one scheduled route, while the airline becomes a fully fledged provider of aircraft and staff support for other international carriers.

--Bangkok Post 2005-08-31

[bukmba]

- delete -

Edited August 31, 2005 by capo

[john b good]

I say good riddance. They are just a two bit third world airline " and nothing more" (and never would be in the future)

Anyone in their right mind would give this shonky operator a big miss (providing they are not driven by saving a couple of miserable baht at the expense of their own and their family's safety)

Their demise is a loss to no one, and certainly not to Thailand.

[BARRYT]

Maybe they could have saved a few jobs by sorting out there jet fuel consumpsion ie, i think radweld works in the wings as well as radiators to stop all those irritating leaks along the runway

[meelousee]

(Phuket Air lays off 300 after huge losses) Chawanit Chiamcharoenvut, executive vice president of the airline, said the steep rise in fuel prices had increased operating costs 30-40 per cent, while the airline had to pay fixed costs on aircraft leases, office rents and staff salaries.

No use in having employees that have nothing to fly! Now they must do all the maintenance they have been putting off for,,, how long?

What happened is that they bought some of these aircraft outright with loans, so they would not be tied down to a ACMI (aircraft maintenance & Insurance) lease to own, nor a dry lease to own which they would contractualy garantee maintenance and insurance and follow GCAA, JAA and CAA regulations, and have thier pilots certified by the owners.

Phuket Air's sole international routes are chartered services from Thailand to Myanmar and Japan, and ``those flights don't have any problem,'' Chawanit said.  Source: http://www.bloomberg.com/apps/news?pid=100...id=aLulC6.qxrMs

Budget Airline means they dont have a Budget to do it right, cut corners, not pay for fuel at the pump and allow catering and airport bills to stack up like cord wood in hopes of the "season" to pull them through.

I wonder who will buyout Phuket Airlines?

[Rinrada]

Actually quite sorry to read of the imminant demise of of Poo Air.

It wasnt all that many years ago that only the major,very heavily subsidised national airline carriers had a complete monopoly on the industry ..hence international travel as we know it now was restricted to a very small number of usually very wealthy individuals which did an effective job of not only keeping the world a very small and I suppose restrictive place but also denied us plebs the opportunities to really travel..

Remember the days when a return to say Paris would cost you an arm and a leg and on that same basis the opportunity of us mere mortals being able to book a clipper to New York or take the British Empire Airways Seaplane to Australia would have been the impossible dream.

Come the 1960s and old beaten up Illushion bombers were knocking out charters to Majorki and Costa Wotever for only a months wages ...great

Then flying really came of age with the likes of ..Skytrain,Go (which went)Stelios...Ryan air and all those little US budget carriers ( Cal Air-San F >L.A for $20 )

Now for the first time in S.E Asia the local punters had/have a choice and with the likes of Air Asia-Nooky Air-Tiger Air....wot no Pussy cat air?etc including Poo things are opening up.

Never before was travel so easy ..or Cheap (and I will be the first to moan)however I still think its sad that what could have been a good flying circus hit the sawdust so quickly.

Only a couple of weeks ago TG kicked out their boss and now P.Airs boss dumps his company .....wheres the problem....both good business opportunities/ideas but perhaps it says something about the management....

No doubt there will be many more new "fred karnos"in the offing so until then Poo -RIP....glad I didnt get to know you....

[A. BOOZER]

Actually quite sorry to read of the imminant demise of of Poo Air.

Hear, Hear. Not so long ago in the U.K. we had the demise of Laker Airways, surely the forerunner of all discount airlines. Without the likes of Sir Freddie, would we have had follow ons, in the likes of Virgin, and all the current crop of economy carriers.

Like many others looking for cheap travel, between the U.K. and Thailand, I flew with Phuket. Admittedly old aircraft, but the level of service far exceeded that of many other companies, and I never had the leftovers from the previous nights meals served up as breakfast, as I did on two consequetive return flights with a certain Dutch carrier.

This could so easily have been a success story, that sadly was badly affected by the tragedy of December 26 and other world events. Yes, they had their difficulties, but surely I am not the only person to have been stranded by other 'major' companies having aircraft going "technical"?

Without the likes of Phuket Air and it's predecessors, how many of us would be able to fly the distances that we fly, as often as we do?

[The_Moog]

Obituary:

...and so farewell Phuket Air.

At least you never crashed a 747 in a massive fireball and incinerated everyone.

(You would have done - eventually)

[ovenman]

Vikrom Aisiri, founder and president of the privately owned carrier, said yesterday he would virtually throw in the towel after a four-year struggle to keep flying in a hostile operating environment made worse lately by soaring fuel costs.

The frustrated Mr Vikrom, who is also a Thai senator, said the company was preparing for the "soft landing" to limit further losses and troubles. He said he looked back on four years of prejudice, negative perceptions from authorities, the media and even some members of the public, at home and overseas.

Of course to hear Mr Vikrom tell it, nothing that Phuket Air themselves did (or didn't do) had anything to do with their troubles. Their downfall was caused solely by outsiders that were out to get them. Maybe Mr Vikrom can run one last scheduled flight on the Bangkok-Denial route.

[thaiphoon]

Don't know about everyone else, butthe following sponsorship ad is showing top of the list:

Phuket Air Flights

Get cheap flightson Puket Air flights at ebookers

Maybe these are the last few seats??

[george]

Update (Phuket Gazette):

Phuket Air ‘will not close down’

BANGKOK: -- Capt Chawanit Chiamcharoenvut, Executive Vice-President of Phuket Air, this afternoon confirmed to the Gazette that Phuket Air is not going out of business, but will instead expand its local routes.

The announcement came after a report in today’s Bangkok Post that quoted Senator Vikrom Aisiri, founder and president of the airline, as saying the company was “preparing for a ‘soft landing’ to limit further losses and troubles”.

Phuket Air, Sen Vikrom was quoted as saying, will be “ending most scheduled flights, ceasing charter operations and leasing nearly all of its fleet including the nine Boeing 747 jumbo jets.”

The article also reported that K. Vikrom had said that “he looked back on four years of prejudice, negative perceptions from authorities, the media and even some members of the public, at home and overseas.”

Today, however, after coming out of a mee ting lasting much of the day, Capt Chawanit confirmed a report in today’s Nation newspaper, in which he was quoted as saying that Phuket Air will scale down its long-haul operations and instead focus on its local routes.

“I can confirm 100% that we are continuing in the aviation business and will expand our domestic routes. I guarantee it,” Capt Chawanit told the Gazette.

“I heard Sen Vikrom talk with the Bangkok Post reporter yesterday and he sounded very hurt, [after the] pressure and disappointment of having much bad press that was not true.

“I asked him [K. Vikrom] today why he said that, because people would be shocked to hear it. I have already explained to the Bangkok Post reporter that it’s not true,” he said.

Capt Chawanit said that, far from closing, the airline is considering adding a three-flights-a-week service between Chiang Mai and Udon Thani in October, and boosting flights be tween Bangkok and Yangon from two to four a week.

Phuket Air currently operates three domestic flights, Bangkok-Buri Ram, Bangkok-Mae Sot and Bangkok-Ranong, and one regional route – Bangkok-Yangon.

--Phuket Gazette 2005-08-31

[Bangkok Barry]

The President says the airline is closing, and the Vice President says it isn't.

TIT

[Galong]

Update (Phuket Gazette):

Phuket Air ‘will not close down’

“I can confirm 100% that we are continuing in the aviation business and will expand our domestic routes. I guarantee it,” Capt Chawanit told the Gazette.

--Phuket Gazette 2005-08-31

<{POST_SNAPBACK}>

You see folks, it a three-step program:

1. Open mouth

2. Remove shoe, we are in Thailand after all

3. Insert foot in mouth.

Man, I wish is was legal to gamble here. I'd put some savings on the line for this sure thing.

[sparky38]

If phuket drop the buriram route does any other airline cover this route at present??- from bkk??

[john b good]

If phuket drop the buriram route does any other airline cover this route at present??- from bkk??

<{POST_SNAPBACK}>

No

[Ricardo]

I rather like the idea that increased fuel-surcharges will cut operating-costs. I would expect them to increase revenues, and reduce operating-losses, but what do I know ? Professional management must have changed !

The idea of low-cost good-quality airline-seats between Europe & LOS is a winner. But elderly aircraft require good maintenance, to keep flying reliably, and long-haul is a very different game from short-haul. Perhaps if Poo-Air had stuck to local routes - they might not have blown it.

As The_Moog says ... at least they haven't had a crash yet. Thank God.

[ilyushin]

Looks like an AOC is going to be available. The equipment can be put on scales and sold off for scrap. They needed B767-300ERs and B717-200s and the airline would have made it. The aged aircraft is what killed the business. Guess Thai Air Asia is happy.

[MrWizard]

Update (Phuket Gazette):

Phuket Air ‘will not close down’

“I can confirm 100% that we are continuing in the aviation business and will expand our domestic routes. I guarantee it,” Capt Chawanit told the Gazette.

--Phuket Gazette 2005-08-31

<{POST_SNAPBACK}>

You see folks, it a three-step program:

1. Open mouth

2. Remove shoe, we are in Thailand after all

3. Insert foot in mouth.

Man, I wish is was legal to gamble here. I'd put some savings on the line for this sure thing.

<{POST_SNAPBACK}>

Well I have flown with Phuket Air , the service onboard isn't bad, it was good. The plane though was old and had some starting problems. (often quicky repairs where needed)

For a good company this is not hard to fix up these problems....but I think they lost a lot clients already.....

[cobra]

They've been in a spiral for years, guess this time it's unrecoverable,

[markee]

Personally I'm glad to see the demise of any airline which falls below the minimum safety standards and so overtly puts profit well above safety on its priority list. I had the misfortune to fly in one of their "planes" and I am here to tell you it was scary. Good ridence and may the senior management never find work in this industry again for the sake of all of us.

Mark E

[frankthetank]

flew with them london to bkk in december last year.

very good staff, ground and air.

very old thai air 747, bit of a wagging tail on take off, never noticed any other probs, like the leaking fuel or sparks. then again, was not looking for them. on my way to los, obviously not thinking with my head!!

[Cabana]

this has been a 'dead-airline walking' for months. Friend went to Buri Ram with them but ended up in a bus instead due to 'technical reasons'. Shame no other airlines go to B Ram now but I would not have used these cowboys anyway.

Personally I'm glad to see the demise of any airline which falls below the minimum safety standards and so overtly puts profit well above safety on its priority list. I had the misfortune to fly in one of their "planes" and I am here to tell you it was scary. Good ridence and may the senior management never find work in this industry again for the sake of all of us.

Mark E

<{POST_SNAPBACK}>

[george]

Airline wants explanation of ban by France

BANGKOK: -- Phuket Airlines has demanded official clarification from authorities in France and the United Kingdom of why it is prohibited from flying to the European countries.

Airline senior vice president Kanin Phuvasiten, in a letter to the Direction Generale de l'Aviation Civile (DGAC) of France, summed up Phuket Air's concern: "How could an airline with no track record of air casualty, nor any known cases of a near mishap in its history, be branded as unsafe while many more airlines with past history of flight disaster are not," Mr Kanin asked in the letter.

France last Monday published a list of six airlines prohibited from its airports and airspace.

Phuket Airlines entered the French list on June 4. Also banned were Air Koryo of North Korea; Air St Thomas of the US Virgin Islands; International Air Services of Liberia, and Linhas Aereas de Mocambique and Transairways, both from Mozambique.

None of the airlines on the list were involved in recent crashes.

"Even more perplexing is the fact that Phuket Airlines was granted an approval to fly to France on March 23 by the Department of the French Civil Aviation," continued Mr Kanin's letter, dated Aug 30.

"Consequently astonishing also is the fact such a negative judgement be passed, when not a single Phuket Airlines flight ever flew to France, and no warning was ever released against our airline from your side," Mr Kanin said.

In its published statement, DGAC maintained its list was based on reports indicating the airlines' failures to confirm with the standards established by the International Civil Aviation Organisation (ICAO) in the framework of so-called Safety Assessments of Foreign Aircraft.

Officials of DGAC could not be reached for comment, and the French Embassy in Bangkok was unable to clarify the matter.

Mr Kanin said the Thai airline is taking a similar case to the UK Civil Aviation Authorities which has since April banned it from flying there for safety reasons.

Chawanit Chiamcharoenvut, executive vice president of Phuket Airlines, said yesterday the airline stands ready to have their aircraft safety audited by authorities before taking off for any foreign country. But for now, the airline has no plans to fly scheduled intercontinental flights.

--Bangkok Post 2005-09-01

[Foggy Bottom]

It hasw always seemed too coincidental to me that the launch of Phuket Air was announced 2 days after the Thai Airways "across the board" 20% fare rise in 2001, and that Thai having increased the fare between Chiangmai and Mae Hong Son from 500 to 1200 Baht (=20%?), Phuket Air was announcing on the day of "establishment" that they would be taking over the route at 900 Baht each way.

Conveniently, this placed their fare 300 Baht lower than the new Thai fare, and 400 Baht above the old "unprofitable" fare.

That the founder of Phuket Air was a General, of course did not mean that any collusion had been entered into in the fare setting.

Som Nam Na?

[george]

Clipped wings may ground Phuket Air

BANGKOK: -- Phuket Air emerged as a low-cost airline when Thailand opened its skies to private carriers in 2001. It expanded rapidly domestically and regionally during its first two years, then last year became the first Thai private carrier to London and Amsterdam.

Last week’s ban on its flights to France seems likely to have ended its brief life.

France and Belgium have issued blacklists of airlines prohibited from using their airports, in a bid to calm public fears about flying after a recent series of deadly crashes.

The French list names six companies and the Belgian one lists nine. The Swiss released a similar list on Thursday.

Phuket Airways, which appears on the French list, demanded to know why.

“I really don’t understand what they mean by unsafe. Unsafe for what? Unsafe to operate or unsafe for what? We have never had a serious accident, so I would like to ask the authorities what they mean by unsafe,” said Chawanit Chiam-charoenvut, executive vice president.

France also banned Air Koryo of North Korea, Air St Thomas of the US Virgin Islands, International Air Services of Liberia and two Mozambican companies – Linhas Aereas de Mocambique and Transairways.

Belgium banned Africa Lines of the Central African Republic, Air Memphis of Egypt, Air Van Airlines of Armenia, Central Air Express of the Democratic Republic of the Congo, ICTTPW of Libya, International Air Tours Ltd of Nigeria, Johnsons Air Ltd of Ghana, Silverback Cargo Freighters of Rwanda and South Airlines of Ukraine.

Just after Phuket Air’s Amsterdam service was banned in the middle of April after two weeks’ operation, its Bali service was also told to stop. The end of this phase of Phuket Air’s history has come as no surprise to industry-watchers, some of whom questioned whether a carrier with such weak management should ever have been allowed to move into the long-haul arena.

One analyst pointed out that the failed services to Europe had done little to qualify Phuket Air for its leap into a highly competitive mature route such as Bangkok-London last year.

Former Association of Thai Travel Agents president Suparerk Soorangura said that although he regretted the drop in seat capacity, safety was the most important thing.

“If something happened, it would damage the whole industry. Phuket Air has used old aircraft to cut costs, and this has proved unwise. Better to stop them now than after something happens, so banning them is a good precautionary measure,” Suparerk said.

Asked why the airline had failed in business growth, Chawanit cited last year’s tsunami putting off Western travellers, whom it had targeted.

Another factor was mistaken pricing strategy with much lower long-haul fares than other airlines operating the same routes, so that Bangkok-London and Bangkok–Amsterdam were not the earners they should have been.

The airline itself has now knocked on the head planned flights from Bangkok to Moscow from later this year, and from Bangkok to Sydney from early next year.

An analyst at Thanachart Securities conceded that increased oil prices were another blow beyond the airline’s control.

An aviation specialist noted that no Thai carrier had ever been banned from flying to Europe before.

Phuket Airways is owned by Senator Vikrom Aisiri, who also owns the Club Andaman casino resort on the Burmese island of Thahtay Kyun (Koh Son in Thai) off Ranong, the Dusit Island Resort Hotel in Chiang Rai, and a timber business called West Wood.

--The Nation 2005-09-04