spk
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TG Losing $5 Million A Month On JFK Route?

Wed Nov 09, 2005 2:24 pm

According to TG management, the BKK-JFK non-stop will be cut back from 6 to 4 flight per week because they are losing 200 million baht ($5 million) a month operating this route while the load factor is 70-80%

The number seems very high. This means that they are losing $104,166 per sector on average even at that load factor. Their fare is not rock bottom either. It's comparable to other airlines.

Their revenue would be (assuming cheapo ex-BKK fare)

J class at 70% CF: $3,500 * 30 = $147,000
U class at 70% CF: $1,200 * 30 = $36,000
Y class at 70% CF: $800 * 79 = $63,000
Total round-trip revenue = $246,000 per roundtrip or $123,000 per sector.

What would be an approximate cost of flying such route? If the above number is real, the cost would be around $227,166 per sector. Anyone can enlighten me on how the numbers are working?
 
AA B777-200
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RE: TG Losing $5 Million A Month On JFK Route?

Wed Nov 09, 2005 6:34 pm

That's too bad for the investment.

Just saw this huge ad in BKK. Looks like they're looking for the business. But JFK?! Why not start slowly with LAX, YVR and/or SFO?
 
spk
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RE: TG Losing $5 Million A Month On JFK Route?

Wed Nov 09, 2005 8:13 pm

They will fly non-stop to LAX 3 times a week starting on 1 December. That might be a friendlier market that JFK.
 
AF022
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RE: TG Losing $5 Million A Month On JFK Route?

Wed Nov 09, 2005 9:40 pm

Their advertisements in the NYTimes have been an absolute joke. This route was doomed from the beginning, and the lack of marketing has only hastened the route's demise.
 
sqpax
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RE: TG Losing $5 Million A Month On JFK Route?

Thu Nov 10, 2005 2:43 am

I flew this route last month. At JFK it's just another flight. At BKK it's "The New York Express." Two large pillars outside International Terminal 2 are finished in Thai's purple colours promoting Flight 790. You really felt like you were embarking on a special journey although at that point, I just wanted to get home!

Both ways Economy and Premium Economy were pretty much full. I have no idea about the load factor in Royal Silk up front.

A possible deterrent is the length of the flight. 17+ hours is just too long to be in an airplane as far as I'm concerned. Would I do it again? Not sure, I think when I go back I will consider transiting through either LHR or LAX just to break things up. That said, if you're going to spend 17 hours in "Y" class, this is the airline and the aircraft to do it with. 36" pitch, great IFE and amazing service both ways!

Malcolm
"One night in Bangkok makes a hard man humble, not much between despair and ecstasy" - Murray Head 1984
 
terminalc
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RE: TG Losing $5 Million A Month On JFK Route?

Thu Nov 10, 2005 10:18 am

I don't think that it's the 17 hrs. CO's EWR-HKG is generally 16 hrs & it's full most often when I fly it.

The problems are maybe in the front cabin. TG's business class product has been badly dated for so long that most people paying for biz class would pick almost any other airline. Their new biz class is so expensive that I cannot possibly imagine paying for it when I can fly SQ for an equivalent fare. I'm not in the airline biz, but I suspect that on a route like this if you can't get the premium business then you have problems.

TG has alienated too many travelers with inconsistency in product & commitment to the market. Their schedule LAX-BKK has changed so often over the years that a frequent biz flyer cannot possibly count on them. Same appears to be true with JFK.
 
N1120A
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RE: TG Losing $5 Million A Month On JFK Route?

Thu Nov 10, 2005 10:26 am

Quoting Spk (Reply 2):
They will fly non-stop to LAX 3 times a week starting on 1 December. That might be a friendlier market that JFK.

The thing is, TG owns the LAX-BKK market and treats it that way in that they still fly their old, pathetic Business class on the route. They don't need the non-stops as they make lots on the 1 stops
Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
 
supa7E7
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RE: TG Losing $5 Million A Month On JFK Route?

Thu Nov 10, 2005 10:33 am

Yes, this is probably the most expensive segment any airline on Earth flies... except EWR-SIN, of course... so of course it requires great revenue performance. Not getting that, they'll lose money.

Brand new A345(s) + new seats + lots of crew duty + monumental amount of fuel = very expensive flight to operate.

Good luck Thai, this is a noble struggle for glory as far as airline stories go.

[Edited 2005-11-10 02:35:17]
"Who's to say spaceships aren't fine art?" - Phil Lesh
 
LH459
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RE: TG Losing $5 Million A Month On JFK Route?

Thu Nov 10, 2005 10:59 am

Quoting N1120A (Reply 6):
The thing is, TG owns the LAX-BKK market and treats it that way in that they still fly their old, pathetic Business class on the route. They don't need the non-stops as they make lots on the 1 stops

TG hardly owns the LAX-BKK market. They only operate 4 flights per week, and their fares are often higher than other competitors. They've abandoned the higher yield traffic from LAX to competitors with daily flights and better service.
"I object to violence because when it appears to do good, the good is temporary; the evil it does is permanent" - Ghandi
 
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PA110
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RE: TG Losing $5 Million A Month On JFK Route?

Thu Nov 10, 2005 11:04 am

What? Thai losing money on a North American route? Oh my God! I'm so surprised!

And what do they do? They reduce the frequency so that they lose just as much money per flight, but less often. And now they are going to introduce the same loss making flights into the LAX market? OK, let's take bets on how long this lasts!

I've never seen an airline so completely clueless on how to serve the North American market. They couldn't find their way to profitability on this route with a map and a magnifying glass!

Perhaps they should try a novel concept - SALES AND MARKETING!!! Seems to work just fine at other airlines. Can't imagine why Thai hasn't figured it out yet. Oh wait... they have! They plan to target the ethnic Thai market in Los Angeles! You know, the one that has no brand loyalty and will book whoever offers the cheapest fare.

They've made no attempt at expanding to the broader non-ethnic market, because that would require staff who understand the market. Why bother hiring competent staff when you have a surplus of meddlesome kids of political patrons who can be shipped overseas to keep them from messing up the works at headquarters! They get to come to America and run the show for three years at a time (and do some nifty shopping in Beverly Hills).

Perhaps they should consider the unthinkable... get out of the market and codeshare with other Star Alliance partners. Oh, but can't do that! How else would you ship freeloading government hacks back and forth for their Disneyland vacations?

[Edited 2005-11-10 03:09:51]
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Kahala777
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RE: TG Losing $5 Million A Month On JFK Route?

Thu Nov 10, 2005 11:18 am

One of the sadest things about Thai Airways is their lack of presence, and promotion in the North American market. One would think that service on a split basis between Los Angeles and San Francisco to Bangkok would warrant much more demand and revenue. Why San Francisco? Simply put Star Alliance hub, and gateway to United Airlines. What United Airlines offers in Los Angeles, is pale when compared to San Francisco.

Los Angeles
4 x via A340-500

San Francisco
3 x via A340-500

Perhaps a departure from New York, is in the not so distant furute for Thai. It is well known New York has proved to be anything but rewarding. Thai has near zero connecting feed from Star Alliance partner United at JFK. Thai missed the boat when it comes to the New York market. Singapore, Malaysia, EVA Airways, JAL, All Nippon, Korean, Asiana, Air China, China Airlines, and Cathay Pacific have much more established service to the New York market.

KAHALA777
 
airtropolis
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RE: TG Losing $5 Million A Month On JFK Route?

Thu Nov 10, 2005 12:14 pm

Interesting discussion, from what I understand, Thai's woes are largely due to its lack of marketing and inconsistent product and scheduling in the N. American market. Still, the flights are more or less well patronized and on a per flight basis, you'd expect them to make some money.

The question I have is, what is the economics of such a ultra long haul route? SQ has been operating the routes from LAX and EWR to SIN, and from what I heard, have been very successful out of both LAX and EWR with high load factors. Whether SQ are making money off these 2 routes, I am certainly not sure, but they seem keen on extending their ULH fleet considering their recent RFPs.In addition, their recent good financial results were aided by strong traffic demand on N. American routes of which the ULHs are a significant part of

So:
Is it because of the economics of the plane? - with current high fuel prices and the fact that the plane has to carry a lot of it just to fly all the way non stop, such ULH routes are just not economically feasible at this point of time? (apparently Emirates are realising that the A345 is not so economical with the current price of fuel and its 4 engines)

Is it the way the plane is configured, ie with SQ's 2 class configuration and huge Raffles vs Exec Econ configuration, vs Thai's 3 class layout with regular economy as well?

Does it come down to the different networks of the 2 carriers, with SQ being traditionally stronger in the N.American market and with strong connecting traffic to India?

What do you guys think?
 
bistro1200
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RE: TG Losing $5 Million A Month On JFK Route?

Thu Nov 10, 2005 12:25 pm

SFO is where it's at. Stick it in with UA's massive Asian departure bank at 1100-1330, and throw a Star tag on it. Get feed from MEX, even deep South America.

Imagine: 1-stop to BKK (and the stop is in the US) from about any large city in the USA, including 3-4 cities in Canada.
Measure to the millimeter, mark with a crayon, cut with an axe.
 
fuffla
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RE: TG Losing $5 Million A Month On JFK Route?

Thu Nov 10, 2005 8:05 pm

From what I have heard, Thai management is apparently non-existent. They announce that they will fly to new routes, but then stagger backwards when a deficit is seen for the year-end. That is not the way to make money....if you continue to rely on already established routes, then the airline will fail. Economic downfalls such as the Asian economic crisis early in the 21st century can occur at any time. Since Thai have based the majority of their income on European and Oceanic routes, what will happen if another crisis occurs?
EXPAND. We may finally see Moscow start up. However what happened to Johannesburg? Why not San Francisco? Thai have got to start to realise the potential of the markets they have access to and tap into them. Just starting up the New York route will not gain market share...you have to keep on pushing and pushing with advertising to make consumers realise that Thai actually exist in eastern America. Their marketing manager has to be sacked immediately and replaced by someone who knows what they are doing...
 
FA4UA
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RE: TG Losing $5 Million A Month On JFK Route?

Fri Nov 11, 2005 5:04 am

to answer one of the first questions...

I read in USA Today that a 777 costs about $5,000/hr to operate and a 744 costs around $7,000-$8,000 an hour. This includes fuel, mechanical support, staffing (FA and FO), average landing fees, etc.

These figures are all USD$.

FA4UA
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sparkingwave
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RE: TG Losing $5 Million A Month On JFK Route?

Fri Nov 11, 2005 5:06 am

Quoting Spk (Thread starter):
they are losing 200 million baht ($5 million) a month operating this route while the load factor is 70-80%

Doesn't this Airbus A340-500 have fewer seats than the conventional A340 to compensate for the extended range? Wouldn't that be another reason that TG is losing money?

SparkingWave
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DIA
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RE: TG Losing $5 Million A Month On JFK Route?

Fri Nov 11, 2005 5:13 am

"But JFK?! Why not start slowly with LAX, YVR and/or SFO?"

"They will fly non-stop to LAX 3 times a week starting on 1 December. That might be a friendlier market that JFK."


With an overall 70-80% load factor to/from JFK? You can't get much more friendlier than that. Something else needs to be looked into...it isn't that they're not getting enough pax.
Ding! You are now free to keep supporting Frontier.
 
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eta unknown
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RE: TG Losing $5 Million A Month On JFK Route?

Fri Nov 11, 2005 5:16 am

Thai is the most mis-managed airline in Asia due to Govt. inteference (Royal Brunei comes second). Their most profitable North American route was DFW-SEA-NRT-BKK, then that was cut to offer LAX daily which has performed marginally. TG has traditionally carried a lot of Indochinese traffic, but I don't think there's that much of a market in NYC. And as correctly stated above, the 747 business class is unacceptable for the prices charged- Thai lost the plot in the mid 80's- prior to then, the company was always lauded- not any more.
 
PhilSquares
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RE: TG Losing $5 Million A Month On JFK Route?

Fri Nov 11, 2005 5:35 am

Again, please don't confuse load factor with profitability. TG is well know for discounting their tickets and using consolidators to fill their flights. In fact, some of the best travel deals in the world are available EX-BKK!

If the yields aren't high enough, you can fill the aircraft and still lose money.

When SQ first started the LAX/EWR flights, the fare was the same as the onestop to LAX/JFK. However, over time the fares increased to a point where the routes became sustainable.

Quoting Airtropolis (Reply 11):
Whether SQ are making money off these 2 routes, I am certainly not sure,

Yes, they are. However they misjudged the demand for premium seats in both the LAX and EWR markets.
Fly fast, live slow
 
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airzim
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RE: TG Losing $5 Million A Month On JFK Route?

Fri Nov 11, 2005 5:40 am

The only reason TG exists is to bring tourists to Thailand. BKK is a very small business market, and is the cheapest place to fly in to due to the tons of tourist traffic. Even out of Australia, QF can only muster 1 flight a day and that goes onto London.
 
6thfreedom
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RE: TG Losing $5 Million A Month On JFK Route?

Fri Nov 11, 2005 5:50 am

I think they key word here is consitentcy.

As many of you have pointed out, TG has lost the plot over the last few years, and pax, especially J class, have moved on.

Here's an example.

The A346 was introduced to MEL in August, and there was a marketing campaign promoting the new J class. In Nov and Dec, the service was changed back to MD11, and is due to go back to A346 in Jan.
If I paid top dollar to fly the new J class, that's exactly what I would expect.

The irony is the A346 was put on to operate non-stop AKL. Given that TG would be the only carrier offering non-stop BKK-AKL, common sense would tell you you could do it with MD11 for a couple of months, as pax would go for a non-stop service over a one-stop.

So there you have it.... 2 issues.,.. counsistency and common sense!
 
SRT75
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RE: TG Losing $5 Million A Month On JFK Route?

Fri Nov 11, 2005 6:48 am

Quoting Spk (Thread starter):
J class at 70% CF: $3,500 * 30 = $147,000
U class at 70% CF: $1,200 * 30 = $36,000
Y class at 70% CF: $800 * 79 = $63,000
Total round-trip revenue = $246,000 per roundtrip or $123,000 per sector.

You also need to account for an additional revenue stream -- Cargo.

Quoting FA4UA (Reply 14):
I read in USA Today that a 777 costs about $5,000/hr to operate and a 744 costs around $7,000-$8,000 an hour. This includes fuel, mechanical support, staffing (FA and FO), average landing fees, etc.

If this were true, the cost of the flight (round trip) would be up to $272,000, explaining the loss.

But, there is an extra cost: if frequency is high you will need 2 aircraft to fly the route.

A reduction in frequency may be a mechanism to use only one craft on the route, put the other craft in more profitable service, and increase the airlines overall profitability.
 
gritzngravee
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RE: TG Losing $5 Million A Month On JFK Route?

Fri Nov 11, 2005 6:57 am

Ouch 5 million a month!!!!! Are they taking tips from execs at UAL and Delta?
 
Econojetter
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RE: TG Losing $5 Million A Month On JFK Route?

Fri Nov 11, 2005 10:21 am

It would be great if someone could provide some insider news on the performance of SQ's EWR nonstop. Is it profitable or hovering around breakeven?

However challenging it may be for SQ to maintain that service, the challenges for TG790/791 are even greater considering the TG brand barely even registers in North America. In the NYC market, SQ26/25 has served JFK continuously for more than a decade and the nonstop SQ22/21 replaced an existing one-stop EWR.

TG790/791 departure and arrivals at BKK are pretty favourable for SoutheastAsian connections. There is a potential to rival SQ's EWR nonstop in attractiveness to business travellers but in an underdog position against a determined competitor with deeper pockets and superior reputation, TG is looking at a long exhausting battle. And that is only if TG can maintain a daily service. I begin to worry that the reduction to 4x weekly service may be a fairly short prelude to a pullout.

Perhaps leaving JFK and instead making LAX daily with the 3 A345 aircraft could be a way forward. Also (a wilder idea), what about a BKK-SFO nonstop (an A346 could do it) co-operating with UA and targeting India-originating pax as well? That could partially short-circuit SQ's SIN-HKG/ICN-SFO offerings...

[Edited 2005-11-11 02:23:04]
 
flyingexpat
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RE: TG Losing $5 Million A Month On JFK Route?

Fri Nov 11, 2005 11:47 am

Having flown this flight before, I would say that the quality of service is outstanding, but like all others have pointed out- very inconsistent between the rest of their a/c.

Also, look at the competition into NYC from southeast Asia- CO and CX from HKG, Eva from Taipei, and MANY from Japan with very solid connecting service. This is not even taking into consideration the Singapore nonstops as well.

Thai was WAY too late entering the market, and they had no real business strategy for this route, and now they are paying for it. I do promise one thing though, is that this flight will become profitable if they stick with it a bit longer due to the fact that Bangkok is becoming VERY attractive in the world markets, especially garments/ mass manufacturing. The business push here will be the only thing to save them.
 
vincewy
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RE: TG Losing $5 Million A Month On JFK Route?

Fri Nov 11, 2005 1:21 pm

Another problem is connections available from BKK, arriving aorund 5 pm, which only leaves a few Indian flights, some of the TG regional flights aren't even available after 5 pm (ie:PNH).

It leaves me to believe the markets for ULH flights are very limited, I can certainly name a few with my fingers, SIN-EWR/LAX, SYD-LHR, and perhaps EWR-BOM, which have high yield, premium business travellers to sustain. If I were Boeing, I probably wouldn't waste time with developing ULR aircraft, even with ultra efficient 777.
 
wjcandee
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RE: TG Losing $5 Million A Month On JFK Route?

Fri Nov 11, 2005 2:59 pm

Can these numbers be right? It can't possibly be an OPERATING loss of $5MM per month. That would be almost exactly $100,000 per one-way flight. That would mean that you would need an additional $719 per passenger each way, assuming a 70% load factor. There's something clearly wrong with the math, either their projections or their present calculations.