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What's Up With BKK (Bangkok) And Legacy Carriers  
User currently offlineairtropolis From Singapore, joined Apr 2000, 143 posts, RR: 0
Posted (2 years 6 months 3 days 1 hour ago) and read 5805 times:

First we had AF reducing frequencies to 3? x per week and now LH are saying it is one of their weakest destinations, which along with Nanjing and Chennai are at risk of being axed. What is it with BKK as a destination - it is a favored tourist destination and one of the largest cities in Asia, why do major airlines like LH and AF struggle with the route? Is it due mainly to the competition Middle Eastern carriers?

22 replies: All unread, jump to last
 
User currently offlineanstar From United Kingdom, joined Nov 2003, 5264 posts, RR: 7
Reply 1, posted (2 years 6 months 3 days ago) and read 5767 times:

Quoting airtropolis (Thread starter):
it is a favored tourist destination and one of the largest cities in Asia, why do major airlines like LH and AF struggle with the route? Is it due mainly to the competition Middle Eastern carriers?

Week european economies, political disruption/uncertainty in Thailand as well as it being a low yield destination.

QF are also decreasing BKK capacity.


User currently offlineLAXintl From United States of America, joined May 2000, 25772 posts, RR: 50
Reply 2, posted (2 years 6 months 2 days 23 hours ago) and read 5685 times:

While being the capital of a now tamed Asian tiger nation, its essentially a mass market tourist destination for many carriers.

At the end of the day, its a very competitive market in fares, and the with airline with the lowest production cost will win.

As result the less cost efficient legacy carries while maybe having full flights end up operating at a loss. Its essentially becoming a long-haul LCC market to a certain degree.



From the desert to the sea, to all of Southern California
User currently offlinemigair54 From Spain, joined Jun 2007, 1781 posts, RR: 0
Reply 3, posted (2 years 6 months 2 days 22 hours ago) and read 5584 times:

Middle east carriers have a lot of to do here as well. Multiple daily flights with Qatar, Emirates, Oman Air.....

User currently offlineLawair From United States of America, joined Jan 2009, 202 posts, RR: 0
Reply 4, posted (2 years 6 months 2 days 22 hours ago) and read 5473 times:

Quoting LAXintl (Reply 2):
Its essentially becoming a long-haul LCC market to a certain degree.

There really isn't that much LCC competition from Bangkok to Europe however. There are plenty of leisure charters, but not regularly scheduled LCC airlines that compete with LH, BA, and the like. BKK is actually a relatively high yield destination for intra-Asian routes, but it's a relatively low yield destination for anything else--Europe, North America, etc.

There are generally a number of main reasons why European legacy carriers are having more trouble in BKK and other areas:

-increased competition from Middle Eastern carriers - the Middle East carriers are particularly aggressive in the BKK market, and it's not just EK/EY, but WY, QR, TK, and RJ have been building up. Other Middle East carriers have remained steady as well in BKK.

-European economic weakness

-increased direct competition from a more assertive TG - TG has been more eager to expand services and improve product over the past few years. It now dominates on its routes to LHR, FRA, and CDG. While LH may struggle with BKK-FRA, its Star Alliance partner carrier TG is operating double daily BKK-FRA and will soon plop in a A380 on those flights. CDG likewise, TG has recently bolstered services to 10x weekly, and they will decrease that back to daily when they upgauge to an A380 as well.

-the end of most European fifth freedom flying from BKK - I think the BKK-CDG route for AF was particularly hurt when AF decided to bypass the BKK stop for its Vietnam services. I believe all tags from BKK have been ended for AF. KLM is in a similar situation; they once had a mini hub in BKK and the last fifth freedom tag to TPE has now ended, leaving a standalone BKK-AMS flight for KL (and hence, a downgauge to the 777). The AMS route also has direct competition from Asian carriers. BA has also dropped BKK-SYD, and LX dropped BKK-SIN a few years ago.

All of the routes I think can be analyzed individually. I don't know how OS and SK are doing. I believe AY is doing well actually, and they are pretty dominant on BKK-HEL, a route on which TG does not even compete. Quite obviously, the routes that are performing the strongest for European carriers (where capacity has increased) are routes that don't have significant nonstop competition (HEL to BKK, for example). (VIE has two carriers but I think OS may be doing better than BR's fifth freedom flight.) The problem with BKK is every other nonstop route has direct competition by an Asian carrier. Off the top of my head AMS has three carriers, LHR has 3, and the rest seem to have at least 2. One or two European routes don't even have a European airline competing (ie. MAD).

[Edited 2012-04-24 10:04:22]

User currently offlinemogandoCI From , joined Dec 1969, posts, RR:
Reply 5, posted (2 years 6 months 2 days 22 hours ago) and read 5453 times:

Quoting LAXintl (Reply 2):
While being the capital of a now tamed Asian tiger nation, its essentially a mass market tourist destination for many carriers.

??? The 4 Asian Tigers are South Korea, Taiwan, Hong Kong, and Singapore.

Thailand is still far behind in terms of GDP per capita.


User currently offlineLawair From United States of America, joined Jan 2009, 202 posts, RR: 0
Reply 6, posted (2 years 6 months 2 days 21 hours ago) and read 5409 times:

Quoting mogandoCI (Reply 5):
Quoting LAXintl (Reply 2):
While being the capital of a now tamed Asian tiger nation, its essentially a mass market tourist destination for many carriers.

??? The 4 Asian Tigers are South Korea, Taiwan, Hong Kong, and Singapore.

Thailand is still far behind in terms of GDP per capita.

mogando's right here. I think Thailand is called a "Tiger Cub Economy" which I guess is some form of second generation Asian tiger. (There's a wikipedia entry) While Thailand has been growing and developing considerably over the past few years, the legal system and politics have been floundering around for decades. I'd say Thailand is definitely a good 15-20 years away from being what the actual Tigers are today. Certainly Bangkok is a lot closer, but still pretty far.


[Edited 2012-04-24 10:14:06]

User currently offlineLAXintl From United States of America, joined May 2000, 25772 posts, RR: 50
Reply 7, posted (2 years 6 months 2 days 21 hours ago) and read 5357 times:

When I say LCC, its a euphemism for lots of low fares, and lots of low cost producers of capacity in the market.

BKK has long been know as a relative low-fare long haul market. Combine that with all the airlines that can offer low unit cost compared to legacy European peers you end up with the situation where its essentially become a LCC marketplace.

Quoting mogandoCI (Reply 5):
??? The 4 Asian Tigers are South Korea, Taiwan, Hong Kong, and Singapore.

Today the four economically dominant countries in the Southeast Asia after Singapore are called Tiger Cub.

http://en.wikipedia.org/wiki/Tiger_Cub_Economies

The older Asian Tiger's were the countries that saw booms in the 1970-1990s and now have developed into advanced and strong economies on their own. Now the baton has been passed to the tiger cub nations.



From the desert to the sea, to all of Southern California
User currently offlineLawair From United States of America, joined Jan 2009, 202 posts, RR: 0
Reply 8, posted (2 years 6 months 2 days 21 hours ago) and read 5298 times:

Quoting LAXintl (Reply 7):
When I say LCC, its a euphemism for lots of low fares, and lots of low cost producers of capacity in the market.

BKK has long been know as a relative low-fare long haul market. Combine that with all the airlines that can offer low unit cost compared to legacy European peers you end up with the situation where its essentially become a LCC marketplace.

If you're using LCC as a relative term, then I can definitely agree. The airline with the more competitive cost structure will of course find more success. That being the case, Middle Eastern carriers and TG do have far lower costs than the European legacy carriers, who probably deal with some of the highest costs in the world. BKK has much lower taxation as well, so given that, I guess it's not surprising TG and others (with extensive operations there and the rest of Southeast Asia) should have better financial footing then the European legacies. The fares aren't exactly what one would call "low fare" though, but the costs are certainly lower.


User currently offlineHELyes From Finland, joined exactly 4 years ago today! , 961 posts, RR: 1
Reply 9, posted (2 years 6 months 2 days 20 hours ago) and read 5162 times:

Quoting Lawair (Reply 4):
I believe AY is doing well actually, and they are pretty dominant on BKK-HEL, a route on which TG does not even compete.

Yes HEL has been expecting a move from TG but nothing... AY have been serving BKK 2x daily in winter (1x daily in summer), but no room for competition? AY also have busy charter service (330) to Phuket and Krabi, more competition there though.


User currently offlineViscount724 From Switzerland, joined Oct 2006, 25653 posts, RR: 22
Reply 10, posted (2 years 6 months 2 days 18 hours ago) and read 4998 times:

Quoting anstar (Reply 1):
Quoting airtropolis (Thread starter):
it is a favored tourist destination and one of the largest cities in Asia, why do major airlines like LH and AF struggle with the route? Is it due mainly to the competition Middle Eastern carriers?

Week european economies, political disruption/uncertainty in Thailand as well as it being a low yield destination.

The negative media exposure from the serious floods also didn't help.

As already mentioned, the lack of significant premium class demand has always been a problem for BKK. High-cost legacy carriers can't cover their costs where almost all the traffic is low-yield tourists looking for the cheapest fare. And that type of traffic doesn't mind connecting at DXB/AUH/DOH etc.

Thailand has also been very liberal in granting traffic rights, including 5th freedoms, for many years which means a huge amount of competition and resulting low fares.


User currently offlinegabrielchew From United Kingdom, joined Aug 2005, 3311 posts, RR: 12
Reply 11, posted (2 years 6 months 2 days 18 hours ago) and read 4925 times:

Quoting Lawair (Reply 4):
While LH may struggle with BKK-FRA, its Star Alliance partner carrier TG is operating double daily BKK-FRA and will soon plop in a A380 on those flights.

I flew TG yesterday BKK-FRA. Didn't see a single empty seat empty in economy. I saw 2 empty in C, and first was 5/8 - pretty good loads. If you look at direct Europe-BKK flights (not via Middle East), then fares are really quite high.



http://my.flightmemory.com/shefgab Upcoming flights:LCY-ARN-AMS-LGW,STN-OTP-AMS-YUL,YQB-JFK-LAX-DUS-STN,LGW-DXB-BKK-HKG-
User currently offlinemogandoCI From , joined Dec 1969, posts, RR:
Reply 12, posted (2 years 6 months 2 days 18 hours ago) and read 4882 times:

Quoting LAXintl (Reply 7):
Today the four economically dominant countries in the Southeast Asia after Singapore are called Tiger Cub.

http://en.wikipedia.org/wiki/Tiger_Cub_Economies

The older Asian Tiger's were the countries that saw booms in the 1970-1990s and now have developed into advanced and strong economies on their own. Now the baton has been passed to the tiger cub nations.

They can call it anything they like, but among that list only Malaysia is close to where the original 4 were 20 years ago.

BKK gained prominence because it was along the Kangaroo route and it was a great stop back in the Cold War days to bypass USSR/China when flying Europe-East Asia. It was getting ahead of itself.


User currently offlineThomas_Jaeger From Switzerland, joined Apr 2002, 2393 posts, RR: 28
Reply 13, posted (2 years 6 months 2 days 11 hours ago) and read 4586 times:

I obviously do not have statistical evidence at all, but during the time I have been working for the EK Group and flying back and forth between BKK and DXB all the time, I had the general feeling that at least 50% if not more of premium passengers on the route were typically from the Middle East. As has been said above, BKK has more premium demand within Asia than from Europe and that probably is also true for routes from the Middle East as it is a pretty popular shopping, vacation and medical tourism destination.


Swiss aviation news junkie living all over the place
User currently offlineGoldorak From France, joined Sep 2006, 1850 posts, RR: 4
Reply 14, posted (2 years 6 months 2 days 8 hours ago) and read 4454 times:

Quoting Lawair (Reply 4):
I believe all tags from BKK have been ended for AF.

now yes but it's only since end-march (beginning of the summer season). In march 2011, AF launched PNH as a tag on BKK flight (3 weekly flights were continuing to PNH and 4 were terminator in BKK). Since end of march, the PNH tag has been moved to the SGN flight.


User currently offlineEK413 From Australia, joined Nov 2003, 4979 posts, RR: 4
Reply 15, posted (2 years 6 months 2 days 8 hours ago) and read 4423 times:

Quoting airtropolis (Thread starter):

Well you hit the nail in the head with your question... Middle Eastern carriers... EK standalone serve BKK 3 X daily including an A380...

Quoting Viscount724 (Reply 10):

The media does what it does best provide negative news... I was in BKK during the floods and believe me wasn't as bad as they made it out to be...

EK413



Good evening, ladies and gentlemen. We are tonight’s entertainment!
User currently offlineIndianicWorld From Australia, joined Jun 2001, 2991 posts, RR: 0
Reply 16, posted (2 years 6 months 2 days 8 hours ago) and read 4394 times:

Just goes to show that building a shiny new airport does not mean sustained or increased success in growing the market. It should be something that many that call for huge new terminals should take notice of.

BKK is a market that is challenging to many carriers. Its mantle is being moved to other competing airports in the region, and many carriers are looking at markets which were not considered in the past. More non-stop flights to other cities will hurt a hub like BKK more. In coming decades, as Thailand grows in its own right, it will begin to develop other sectors of travel which it currently lacks.


User currently offlineQuokkas From , joined Dec 1969, posts, RR:
Reply 17, posted (2 years 6 months 2 days 7 hours ago) and read 4285 times:

How many passengers from Europe have Bangkok as their ultimate destination? Many holiday makers are destined to Phuket and they can avoid the likes of LH, OS and AF by flying with any of the numerous European seasonal operators offering services to HKT.
HKT has seen quite impressive growth over the past few years:

Quote:
With the total airport figure rising from 5,779,918 in 2009 to 7,043,783 in 2010 to 8,467,995 in 2011, it means Phuket remains in a steady upward trajectory.
A rise of 21.87 percent in 2010 has been followed by a rise of 20.22 percent in 2011.

While Middle Eastern carriers may compete on flights into BKK, they have largely left HKT untapped, but how many of that increase in numbers through Phuket would have otherwise travelled through BKK?


User currently offlinechristao17 From Thailand, joined Apr 2005, 941 posts, RR: 8
Reply 18, posted (2 years 6 months 2 days 6 hours ago) and read 4215 times:

Another factor that's affecting Bangkok is that there is an increase in international flying direct to Phuket (Transaero 2x a day during the winter from Moscow, for example) and even a few flights to Chiang Mai. A lot of European tourists are looking to go to the beaches, so having the option to fly to the south of Thailand directly is appealing.

Quoting EK413 (Reply 15):
The media does what it does best provide negative news... I was in BKK during the floods and believe me wasn't as bad as they made it out to be...

Depends where you were. In many of the tourist sections of the city, no it wasn't that bad. For my friends in the north and northeast sides of the city, whose homes were flooded for several weeks, it was every bit as bad as the media depicted.



Keeping the "civil" in civil aviation...
User currently offlinegrimey From Ireland, joined Jun 2005, 456 posts, RR: 5
Reply 19, posted (2 years 6 months 2 days 3 hours ago) and read 3994 times:

Quoting anstar (Reply 1):
Week european economies

I think this is one of the biggest factors because 10 years ago anyone that wanted to take a year off and travel around Australia and New Zealand would stop off in Asia for a couple of weeks and most of the time Thailand was their first port of call. Now when you fast forward to today anyone leaving Europe to go to Australia (just like myself) will usually go as direct as possible because the money isn't there to be having a holiday first.


User currently offlineordjoe From United States of America, joined Aug 2010, 718 posts, RR: 0
Reply 20, posted (2 years 6 months 2 days 3 hours ago) and read 3621 times:

Quoting airtropolis (Thread starter):
tourist destination

Enough said, how much business traffic is coming here and paying F J and full fare Y versus non revs and miles pax, the Thai economy also has a lot more maturing to go, I would not consider BKK a world finance or commercial city.


User currently offlineCyba From Cape Verde, joined Nov 2005, 209 posts, RR: 0
Reply 21, posted (2 years 6 months 2 days 2 hours ago) and read 3355 times:

In the meantime while we're discussing legacy carriers under-performing in BKK, IATA is urging the airport to expand capacity:

http://atwonline.com/airports-routes...xpansion-suvarnabhumi-airport-0424


User currently offlineLawair From United States of America, joined Jan 2009, 202 posts, RR: 0
Reply 22, posted (2 years 6 months 1 day 22 hours ago) and read 2578 times:

Quoting IndianicWorld (Reply 16):
Just goes to show that building a shiny new airport does not mean sustained or increased success in growing the market. It should be something that many that call for huge new terminals should take notice of.

I think this is largely irrelevant since we're discussing specifically the success of European legacy carriers at BKK. The airport itself has been a wild success in growing the market as a whole and needed to be expanded further since day one. Since it opened, traffic has grown roughly 20-25% and the airport is already overcapacity. It is now 16th busiest in the world with a 2011 total passenger figure of 47,910,744 (the stated capacity of the terminal is 45,000,000).

That's why IATA and ICAO are both urging Thailand to expand the airport immediately so that Bangkok air traffic can be consolidated into one airport. The expansion was supposed to happen right away, but political instability (2006 coup, another 3 changes in government) caused regular postponements.

-----------

I think other comments about carriers offering direct service to secondary destinations in Thailand (or, perhaps, primary for European travelers) offer a fair point. There are increased services that are more direct to HKT and KBV that don't require a BKK stopover, and it's possible that these services are hurting European legacy carriers more than Asian counterparts who operate BKK-Europe. The Middle East carriers are in fact taking notice. QR operates DOH-KUL-HKT and EY/AB are jointly operating AUH-HKT using AB aircraft (with German passengers feeding into AUH).

I think given the capacity problems at BKK, Thailand is becoming more interested in promoting direct flying that avoids BKK. TG for example is operating ARN/CPH to HKT this winter (the CPH-HKT flight last season apparently successful), and has flirted with the idea of expanding HKT and CNX internationally in the future. With TG operating nonstops from Scandinavia to HKT, you'd think that should directly hurt SK and perhaps other legacy carriers.


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