Thai Airways International will concentrate on resilient Asian markets lifting frequency on existing routes and opening new destinations.It will also introduce new in-flight products that will roll out during 2012 to improve competitive edge on European routes.
Thai Airways International president, Piyasvasti Amranand, told TTR Weekly on the sidelines of the Star Alliance joining ceremony for Ethiopian Airlines, last week, that performance would improve in 2012 due to improved internal structures and a revised strategy.
“There are concerns. Oil prices remain high, Europe’s economy is in trouble, so we will move production more to Asia giving routes more frequency, upgrade to bigger aircraft and commence new destinations.
“Traffic from Asia was already buoyant before Bangkok was hit by floods. Demand has not fully recovered but I believe recovery will be fast. On some European routes we will try to maintain frequency, but we will deploy smaller aircraft,” said Mr Piyasvasti.
Some changes have already occurred in Asia during the winter schedule such as increased services to Chengdu and Kunming, although the floods did force the airline to suspend expansion or reduce services in the short term.
During the crisis, THAI cancelled over 500 flights from November through mid-January when the normal winter schedule will resume. This caused a substantial drop in arrivals to Bangkok and knock-on effect on hotels bookings.
The severe flood washed away about 40% to 50% of the bookings, especially from Asia, costing THAI Bt3 billion in lost revenue right at the start of the high season. It will flatten the fourth quarter performance shaving the peaks of the winter season to almost the same level as the shoulder seasons.
But by the summer schedule 2012 the airline says it will recover production in Asia, increase frequency to secondary cities such as Bhusan in Korea and possibly intra-Asia sectors such as Bangkok-Hong Kong-Seoul, a service that was cut some years back when the airline concentrated on nonstop sectors.
“The revenue per passenger, per kilometre, on Asian routes is much higher than European routes. The yield on European routes is very low and after deducting fuel costs it cannot match Asia therefore it is reasonable that we shift production from Europe to Asia,” said the airline president.
Middle East carriers also cut into THAI’s yields on intercontinental routes. Even though THAI offers convenient nonstop flights from Bangkok, Middle East airlines can compete with the one-stop services through their home bases.
“The important change in 2012 will our shift to a high quality products. The most troublesome point on the competitive European routes is that we do not have personal screens in economy cabins.
“New products will gradually roll out across Europe. Previously, first and business class on all European routes, except Paris, were doing fine, but the performance in economy class was poor because there were no personal screens.
“Now on the Frankfurt route, both flights now have personal screens on the B777-200ERs leased from Jet Airways and a retrofitted B747. London has retrofitted B747 and from mid-January, we will have a retrofitted Airbus 340-600 with superb products in all three classes. Therefore the main three cities will get competitive products especially economy class where we can still make a profit. By the end of 2012 all European flights will have the same standard product.”
There are 20 aircraft going through a retrofit programme; four are ready and 16 are due to be completed in 2012. The flood delayed retrofitting work at the Technical Department located at Don Mueang Airport.
“In Asia, our products are already good compared to other airlines, but it will be even better when new aircraft are delivered,” he said.
“We take delivery of an Airbus A330 in December and four next year; B777-300ER roll out from late next year (two from eight). Product quality will improve significantly next year.”
The first of six double-decker A380s will join the fleet in September 2012, and start serving Frankfurt, 1 December.
To improve revenue the airline will put more effort into transit traffic as this was sidelined as the airline concentrated on selling Thailand. But this has turned out to be a risky policy due to the constant upheavals in the country and that are likely to continue in the future.
THAI executive vice president, commercial, Pandit Chanapai said: “During the past eight months, our transit traffic has shifted to Middle East airlines. For example, on the Kangaroo route (Australia-UK) travellers are stopping in Doha or Dubai instead of Bangkok.
“Our strategy is to develop regional transit routes where we have a strong network. We fly to six points in China, five in Japan, two in Korea. We will be increase frequency on secondary routes and offer transit through Bangkok.”
The ratio between passengers travelling solely to Thailand and connecting to other destinations should be 65/35, but it dropped to around 70/30. THAI aims to adjust the ratio to 60/40.
The airline will add more destinations to regional airports especially Phuket. It has already started a Copenhagen to Phuket and Seoul-Phuket service and this trend will continue.
“This strategy is to compete directly with charter flights. We will operate these flights seasonally. Next year we plan to operate nonstop flights from Stockholm to Phuket as well. By then, the Copenhagen service will be a roundtrip from Phuket, on both legs not just one as is the case now, but we will reduce the frequency from three to two and add another two from Stockholm,” said Mr Pandit.
Apart from Europe, THAI will add flights from India — Delhi and Mumbai to Phuket during next the high season.
From mid-2012, THAI will introduce the airline Thai Smile to serve domestic and regional routes that are not economical for THAI to operate with big aircraft and full service.
Mr Piyasvasti confirmed the joint venture with Thai Tiger was scrapped, but THAI still has a plan to set up an ultra low-cost carrier.
“THAI should be in every market segment… Not in 2012 … it will take time to set up, recruiting and buying aircraft…It is very late but still better late than never; otherwise, our market share will be eroded.”
In Q1 of 2012, advance bookings are already recovering after a disastrous Q4, which is normally the peak travel season to Thailand.
“For inbound traffic, we have never launched promotion in Q4 before, but we recently launched Thailand Plus, January through to March. So, we are confident bookings will recover soon,” added Mr Pandit.
