Thai Traffic Plunges 43%, Board Members Resign

LAXintl · Tue Jun 24, 2014 1:03 am

The bad news continues over at Thai Airways.

Traffic results show the carrier experienced at massive 42.5% decline in international enplanements during the month of April.

In addition 5 members of the carriers board resigned on Friday, while the Chairman expressed his desire to step down as well but was refused by the military junta.

Five board members quit THAI, Prajin stays
http://www.bangkokpost.com/news/loca...-of-the-thai-airlines-board-resign

Thai Airways International pax down 43% in Apr-2014
http://centreforaviation.com/news/th...pr-2014-cargo-volume-down-5-345509

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Obviously the disturbances, and subsequent military coup and travel advisories are having people steer clear.

If that was not enough for TG, Air Asia X only last week launched its Thai base with pair of A330s serving Seoul, Osaka and Tokyo which might further erode revenues that TG would see.

[Edited 2014-06-23 18:19:03]

RickNRoll · Tue Jun 24, 2014 1:07 am

The internal political bickering in Thailand has caused a lot of damage to the country economically. Better to just sort things out at the ballot box, even if you don't like the result.

Prost · Tue Jun 24, 2014 2:18 am

Unfortunately, with all the turmoil in Thailand right now, my fear is Thai Airways will suffer greatly from benign neglect.

art · Tue Jun 24, 2014 5:58 am

Will they park some A380's? Flying them with half the load they had earlier must cost an awful lot of money.

wzafar · Tue Jun 24, 2014 7:42 am

I hope they don't routes to Pakistan. (KHI/LHE/ISB)

behramjee · Tue Jun 24, 2014 7:48 am

With Cathay suspending its own 4 weekly BKK-KHI services effective 28JUN, Thai would be a total fool to even consider suspending KHI for any reason what so ever. In 2013, 62,000 pax flew KHI-BKK and now TG has full monopoly on this route + providing the fastest option to many ASEAN destinations via BKK. Its current 5 weekly KHI flights (4 of which extend onwards to MCT) can be easily increased to daily and get filled with no problems what so ever.

Cassi · Tue Jun 24, 2014 9:09 am

Thailand's international pax traffic is only down by about 7% in the Jan.-May period, so TG is doing worse than average. Domestic + international pax traffic is actually up slightly.

http://aot.listedcompany.com/misc/st...CalendarYear-Jan-May2014-EN-01.pdf

flythere · Tue Jun 24, 2014 11:24 am

That's indeed a huge setback for TG in their attempt to bring back their glory time.

Guess Garuda will replace TG as the 2nd in South East Asia in terms of traffic.

Just a side note, CX traffic in May rose by 11.2% yoy, part of the reason could be due to unrest in Thailand.

http://www.cathaypacific.com/cx/en_H...-traffic-figures-for-May-2014.html

mercure1 · Tue Jun 24, 2014 2:13 pm

Here are reported load factors. Very terrible - especially market like Europe and Australia. Barely 50%. A380s must be flying with lots of open space.

System load factor: 59.8%,
Domestic: 62%,
Regional: 64.4%
Australia: 54.6%
Europe: 54.6%
North Pacific: 70.5%
Africa: 51%

http://centreforaviation.com/news/th...25-in-may-2014-cargo-down-1-347114

These numbers are with already trimmed frequencies on several routes.

Maybe they will try to sell more planes? Might be good opportunity to reduce the inefficient diversity.

Flighty · Tue Jun 24, 2014 2:27 pm

Thai should have one widebody type, probably A350, imo. And not too many.

lightsaber · Tue Jun 24, 2014 2:38 pm

In a word... ouch.

How can TI survive this?

Quoting RickNRoll (Reply 1):
The internal political bickering in Thailand has caused a lot of damage to the country economically. Better to just sort things out at the ballot box, even if you don't like the result.

But some of this is airline management.

Quoting Cassi (Reply 6):
Thailand's international pax traffic is only down by about 7% in the Jan.-May period, so TG is doing worse than average. Domestic + international pax traffic is actually up slightly.

Interesting.

Lightsaber

mercure1 · Tue Jun 24, 2014 3:14 pm

Quoting Flighty (Reply 9):

Thai should have one widebody type, probably A350, imo. And not too many.

Well they have the A350-900 on order -- 15 of them. But they also have 7878/9s coming as well, plus more 77Ws and A333s.

Though I think this would be good opportunity now to begin removal of some fleet types. A346(6), 744(8), 772(14), 773(6).

Still left with what looks like the oversize A380s and 77W and new arriving 787s for longhauls supplemented with more 787s and A350s in future.

Suppose they can also rearrange(trim) their European network further. They service 13 destinations. Maybe follow Cathay or Singapore leaded and focus on 6-7 markets instead.

olympic472 · Tue Jun 24, 2014 3:45 pm

http://www.nationmultimedia.com/busi...s-for-THAI-directors-30236748.html

Quote: "Thai Airways International (THAI) board members can no longer fly on the national carrier for free after the board outlawed the privilege yesterday as part of a cost-cutting initiative."

This is the probably the reason they quit the Board. They were on board for the free rides and are not necessary the best directors for the business.

I understand they AND their family members receive 10 free international business class trips AND 10 free domestic first class trips every year. Then when retired the directors get a lifetime discount on airfare.

So besides the fleet and service level, consider this to be another reason why the airline is so sick.

LAXintl · Tue Jun 24, 2014 3:54 pm

Quoting mercure1 (Reply 8):
System load factor: 59.8%,
Domestic: 62%,
Regional: 64.4%
Australia: 54.6%
Europe: 54.6%
North Pacific: 70.5%
Africa: 51%

Ouch. Thats some of the worst LF I've ever seen.

To me it seems TG needs to further ramp up its frequency cuts, and indeed look at trimming some cities entirely.

With reduced flying, they than can work to rationalize fleet, and yes park and sell some of the older fleet types entirely.

Quoting olympic472 (Reply 12):
So besides the fleet and service level, consider this to be another reason why the airline is so sick.

Such travel benefits actually seem quite normal based on what I know from what current/former executives, especially at the board level get in the industry.

olympic472 · Tue Jun 24, 2014 4:11 pm

Quoting LAXintl (Reply 13):
Such travel benefits actually seem quite normal based on what I know from what current/former executives, especially at the board level get in the industry.

No questions there are perks for directors but here it is so political. It is a known fact that many do not have experience and the director seat is a "reward".

PlaneAdmirer · Tue Jun 24, 2014 4:12 pm

It is data like this that makes me question the value of the backlogs of both manufacturers. Without profitable flying, it's hard to buy new airplanes.

HB-IWC · Tue Jun 24, 2014 4:29 pm

Quoting LAXintl (Reply 13):
To me it seems TG needs to further ramp up its frequency cuts, and indeed look at trimming some cities entirely.

I don't know how the Scandinavian network is doing, but Europe could likely be trimmed to one daily each to LHR, FRA, CDG, MUC (retimed as a double overnight) and ZRH. MAD, MXP, FCO and BRU can go. As far as I know JNB has never made money and TG would be wise to follow MH's example and get rid of LAX in favor of the existing NH/UA code shares. TG should be able to park the B744 and A346 pax fleets at least.

mercure1 · Tue Jun 24, 2014 4:30 pm

Quoting LAXintl (Reply 13):
Such travel benefits actually seem quite normal based on what I know from what current/former executives, especially at the board level get in the industry.

I would expect they also receive other benefits and compensation. In Europe its common to have support adminstrative staff, car/drivers, housing etc furnished by enterprise.

Quoting olympic472 (Reply 14):
No questions there are perks for directors but here it is so political. It is a known fact that many do not have experience and the director seat is a "reward".

I think such is quite common even in the US. Find me a few non-management board members in the U.S that have any airline industry experience?
Boards virtually always are compromised by non industry types and often are appointed for things like name recognition, or via old friendships such as school mates, former business partners, etc.
Some people actually are professional board members doing only such across multiple companies.

Anyhow, TG is government enterprise. So its quite understandable the board will be government appointed so politics will be a critical decision factor certainly. Again quite normal and happens all over globally in host of industries, not something unique to Thailand or TG.

I think the issues at TG are far beyond the board, but more about market realities. Even outside the coup, the airline is suffering. Its under attack from all angles. From LCCs at bottom, to carriers like ME3 and other Asian power houses.
TG at end of the day sees erosion from from top and bottom.
Yes the board can provide better guidance for management to follow, but again there are understandable social and political constraints they must be aware off. As government enterprise they simply cant park half of fleet, or remove half of staff overnight even if performance metrics dictate such.

Personally I see TG slowly withering away as it becomes less and less meaningful in the market place.

wouwout · Tue Jun 24, 2014 5:32 pm

Having flown Thai 5 times internationally in Asia, both Y and J, it has always been a disappointment compared to Singapore Air, Cathay and Malaysia. It feels like a government organisation, staff can be so-so, meals disappointing and Thai's lounges (especially outside BKK) are just bad. The one in Singapore was a joke, luckily we could get into the Silverkris lounge (after a long walk).

You might have to consider Emirates' presence in BKK, competing with Thai. Does anyone know how many flights EK have from BKK? A much better product as well.

wzafar · Tue Jun 24, 2014 10:02 pm

Quoting behramjee (Reply 5):

I hope TG picks up the customers that CX will leave behind and increases to daily frequency. Not sure if they will react to the security situation though. Would love to see a 787 to KHI from TG as well!

EBGARN · Tue Jun 24, 2014 10:58 pm

A part of the reason for the drop in European traffic:

Scandinavians travel a lot to Thailand, even in times of political unrest.

Five years ago, QR served ARN and CPH with a daily A319. The Nordics was a blank spot on EK's map.

Today, QR has daily B787/A333 service to ARN, CPH and OSL. EK has daily 77W service to ARN & CPH. That is a massive addition of capacity!

Also, for the last few winters, TG has had 10 weekly service to ARN and CPH (and daily to OSL).

Planesmart · Tue Jun 24, 2014 11:28 pm

Quoting Cassi (Reply 6):
Thailand's international pax traffic is only down by about 7% in the Jan.-May period, so TG is doing worse than average. Domestic + international pax traffic is actually up slightly.

Relevant stats are from May 2014 inclusive, when 10 Ministers were removed from Parliament and martial law was declared.

Many countries revised travel information that month.

aa2mm · Wed Jun 25, 2014 3:00 am

Would anyone know if Thai Immigrations have waived the Bht1000 visa fees for foreign guests upon arrival ?
They have done that many times when travel was slow.

ZK-NBT · Thu Jun 26, 2014 11:24 am

Quoting HB-IWC (Reply 16):
TG should be able to park the B744 and A346 pax fleets at least.

Yep sadly but they aren't the most efficient.

Hopefully they won't drop AKL but it could be tagged via SYD/MEL/BNE like it used to, but maybe easier to codeshare with NZ from OZ?!

Quoting HB-IWC (Reply 16):
I don't know how the Scandinavian network is doing, but Europe could likely be trimmed to one daily each to LHR, FRA, CDG, MUC (retimed as a double overnight) and ZRH. MAD, MXP, FCO and BRU can go.

I always wonder why TG serve so many of these places which are 3-4 weekly, it hardly makes sense, better to focus on star hubs and large O&D like you say LHR, FRA, CDG, MUC. They have 6 A380s so maybe a single daily A380 to LHR and FRA, with CDG and MUC dropping F and getting 77Ws. The other A380s could go to SYD/MEL and reduce to 1 daily aswell!? With a rotation to NRT in between.

sandyb123 · Thu Jun 26, 2014 12:20 pm

Quoting wouwout (Reply 18):
You might have to consider Emirates' presence in BKK, competing with Thai. Does anyone know how many flights EK have from BKK? A much better product as well.

Emirates operate DXB - BKK

EK384 - A380 non stop - daily
EK418 - B773 non stop - daily
EK374 - A380 non stop - daily
EK372 - A380 non stop - 5 weekly

There are also a plethora of codeshare connections through SIN and one direct TK A332 codeshare.

Sandyb123

IrishAyes · Thu Jun 26, 2014 1:51 pm

Quoting ZK-NBT (Reply 23):
They have 6 A380s so maybe a single daily A380 to LHR and FRA, with CDG and MUC dropping F and getting 77Ws

Ouchy. I'm flying TG 388 in J between BKK and CDG, my first A380 ride, next January. I hope not before then!!

N766UA · Thu Jun 26, 2014 2:09 pm

Why did they buy A380's if their average load factor is less than 60%?

mercure1 · Thu Jun 26, 2014 3:10 pm

Quoting N766UA (Reply 26):
Why did they buy A380's if their average load factor is less than 60%?

The world was a different place in 2004 when TG placed its A380 order !

Between all the Airbus delays, double global economic recession, ascent of the ME3 and Asian LCCs, plus the more recent events inside Thailand the entire market place is a different one that TG faces now in 2014.

KarelXWB · Thu Jun 26, 2014 3:14 pm

Quoting N766UA (Reply 26):
Why did they buy A380's if their average load factor is less than 60%?

The replace the 744's, the A380 brings significant costs reductions.

Viscount724 · Fri Jun 27, 2014 12:22 am

Quoting wouwout (Reply 18):
Does anyone know how many flights EK have from BKK? A much better product as well.

But TG 777s are 9-abreast in economy, like most Southeast Asian 777 operators, not 10-abreast like EK.

lawair · Fri Jun 27, 2014 9:15 am

It's not just TG board members who are resigning. Since the change in government, board members from various government entities are being encouraged to resign to allow for restructuring. With TG this tends to happen in small doses anyway whenever the government changes hands. TG was of particular concern to the new government though due to recent financial difficulties. It was the ousted government that supposedly pressured the Board to fire a very effective TG president, who was himself appointed during the government prior to the ousted one.

Lest we forget, TG was profitable in 2010 and 2012. It's a fairly resilient (but not quickly adapting) carrier despite its political meddling and external circumstances.

acelanzarote · Fri Jun 27, 2014 10:47 am

Quoting AA2MM (Reply 22):
Would anyone know if Thai Immigrations have waived the Bht1000 visa fees for foreign guests upon arrival ?

When did that start? Been to Thailand a few times but not recently and never had to pay to enter, just the departure tax? Lovely Country but it does seem to have lost its appeal. Shame..

terminalc · Fri Jun 27, 2014 1:41 pm

Quoting KarelXWB (Reply 28):
Quoting N766UA (Reply 26):
Why did they buy A380's if their average load factor is less than 60%?

The world was a different place in 2004 when TG placed its A380 order !

And TG has the awful habit of buying some of everything.

EK413 · Fri Jun 27, 2014 2:17 pm

TG has a complex fleet arrangement which is politically driven. I can't think of a carrier with so many variants which can accomplish identical missions.

EK413

mercure1 · Fri Jun 27, 2014 4:36 pm

Not just aircraft, they have a fetish for various power plant variants as well.

LAXintl · Sat Jun 28, 2014 3:26 pm

Military junta has installed Air Chief Marshal Siwakiat Jayema as president, while Air Chief Marshal Prajin Juntong is the chairman of Thai Airways.

http://www.reuters.com/article/2014/...thai-airways-idUSKBN0F307620140628

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mercure1 · Sun Jun 29, 2014 5:39 pm

Wonderful, two Air Chief Marshal's running a complex commercial enterprise.

Sounds like Soviet days.

Viscount724 · Sun Jun 29, 2014 11:28 pm

Quoting mercure1 (Reply 36):
Wonderful, two Air Chief Marshal's running a complex commercial enterprise.

TG has been dominated by the military for most of its history.

LAXintl · Mon Jul 14, 2014 4:56 pm

I'm sure Q2 numbers will look even worse for TG.

Post coup bookings nose dive. Long haul market bookings down average of 69% days immediately after the May 22nd coup.
There has been recovery but its currently averaging about 11% down.

THE IMPACT OF POST-COUP BOOKING FIGURES ON THAILAND TOURISM
http://www.tourism-review.com/thaila...post-coup-booking-numbers-news4204

In effort to win back Chinese tourism (the largest single source of visitors) there is consideration of lifting visa requirements.

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mercure1 · Mon Jul 14, 2014 11:07 pm

Unless military generals open up the central bank for TG to utilize, I see deep cuts must come at the airline.

Besides a smaller market result of avoidance of Thailand, they are being attacked on every side from either LCCs or ME3, or by other Asian legacy carriers.

thaiflyer · Tue Jul 15, 2014 4:01 pm

Quoting AA2MM (Reply 22):

There was and is never a 1000 Baht entry fee for Thailand.
Only the countries which require a visa on arrival (only a few countries) are required to pay a visa fee.
Most of the countries receive a free 30 day visa exception stamp on arrival.

toxtethogrady · Tue Jul 15, 2014 4:32 pm

Quoting RickNRoll (Reply 1):
The internal political bickering in Thailand has caused a lot of damage to the country economically.

Nothing good ever comes from a military coup. Just a whole lot of bad.

LAXintl · Mon Jul 21, 2014 2:12 pm

Thai published their June traffic numbers -- pretty appalling

Overall enplanements was down 19.3% on 3.5% less capacity. System load factor was mere 59.3%

Load factor by route:
Domestic - 60.5 %
Far East Regional - 60.2%
Oceania - 61.5 %
Europe - 56.3 %
Americas - 74.9 %
Africa - 48.4 %

It seems TG needs to urgently and massively reduce capacity.
Way too many seats in markets like Europe, Africa, even regionally within Asia.

mercure1 · Mon Jul 21, 2014 3:09 pm

For Europe TG should consider closing a few stations.
Also larger markets like FRA, LHR receive double-daily service. They maybe should reduce these to single daily.

This might also be good opportunity to push up retirement of 744 series.

toxtethogrady · Mon Jul 21, 2014 3:11 pm

I remember the days when airlines would kill for 60% load factors. Then again, I remember when fuel was only $1 a gallon.

SCQ83 · Mon Jul 21, 2014 3:23 pm

Quoting sandyb123 (Reply 24):
Emirates operate DXB - BKK

EK384 - A380 non stop - daily
EK418 - B773 non stop - daily
EK374 - A380 non stop - daily
EK372 - A380 non stop - 5 weekly

There are also a plethora of codeshare connections through SIN and one direct TK A332 codeshare.

Thailand is ME3 Central. It is unbelievable the amount of seats flown everyday.

I think your schedules are a bit outdated. EK is launching a 6th daily Bangkok flight this winter.

EK384 (03:05) - A380 non stop - daily (continues to HKG)
EK418 (09:05) - B773 non stop - daily (continues to SYD and CHC)
EK372 (09:40) - A380 non stop - daily
EK370 (15:20) - B773 non stop - daily (starting October 27th)
EK374 (22:35) - A380 non stop - daily
EK376 (03:20) - B773 non stop - daily

In addition, as you say, there is the daily Thai A330 codeshared daily flight.

Etihad has 3 daily flights from AUH

EY408 (09:10) - B777 non stop - daily
EY404 (10:40) - B777 non stop - daily
EY402 (21:45) - B777 non stop - daily

Ten non-stop daily flights UAE-Bangkok, of which only one is Thai.

Qatar has 4 daily from DOH

QR828 (01:25) B773 non stop - daily (continues to HAN)
QR832 (08:35) B773 non stop - daily
QR836 (14:00) B773 non stop - daily
QR822 (21:00) B773 non stop - daily

TK has 2 daily from IST

TK68 (00:55) non stop - daily (continues to SGN)
TK64 (19:50) non stop - daily

Oman Air, Egyptair, Kuwait Airways, Royal Jordanian, Ethiopian... all fly to BKK. And Emirates, Qatar (via KUL) and Etihad fly to HKT (Phuket) as well.

[Edited 2014-07-21 08:23:38]

sshank · Mon Jul 21, 2014 6:11 pm

Quoting SCQ83 (Reply 45):
Thailand is ME3 Central. It is unbelievable the amount of seats flown everyday.

I think your schedules are a bit outdated. EK is launching a 6th daily Bangkok flight this winter.

EK384 (03:05) - A380 non stop - daily (continues to HKG)
EK418 (09:05) - B773 non stop - daily (continues to SYD and CHC)
EK372 (09:40) - A380 non stop - daily
EK370 (15:20) - B773 non stop - daily (starting October 27th)
EK374 (22:35) - A380 non stop - daily
EK376 (03:20) - B773 non stop - daily

In addition, as you say, there is the daily Thai A330 codeshared daily flight.

Etihad has 3 daily flights from AUH

EY408 (09:10) - B777 non stop - daily
EY404 (10:40) - B777 non stop - daily
EY402 (21:45) - B777 non stop - daily

Ten non-stop daily flights UAE-Bangkok, of which only one is Thai.

Qatar has 4 daily from DOH

QR828 (01:25) B773 non stop - daily (continues to HAN)
QR832 (08:35) B773 non stop - daily
QR836 (14:00) B773 non stop - daily
QR822 (21:00) B773 non stop - daily

Well, there is your answer. No airline, even a well run one (much less TG), can survive this kind of onslaught!

lightsaber · Mon Jul 21, 2014 6:40 pm

Quoting mercure1 (Reply 36):
Wonderful, two Air Chief Marshal's running a complex commercial enterprise.

Sounds like Soviet days.

That it does. They're not going to have the mindset to pursue profit...

Quoting Viscount724 (Reply 37):
TG has been dominated by the military for most of its history.

Now that Chinese and Russian airspace is open, there is far more competition. What worked when passengers had to divert southward to get to Europe/Africa doesn't when other hubs are more viable as the available routes have opened up.

Quoting sshank (Reply 46):
Well, there is your answer. No airline, even a well run one (much less TG), can survive this kind of onslaught!

Sadly, they're linked together.

Lightsaber

LAXintl · Mon Jul 21, 2014 11:03 pm

Quoting mercure1 (Reply 43):
For Europe TG should consider closing a few stations.

Also larger markets like FRA, LHR receive double-daily service. They maybe should reduce these to single daily.

This might also be good opportunity to push up retirement of 744 series.

All good suggestions.

I also wonder what to do with the large A380 capacity. Cant be too easy to fill nor economic to fly around at 50-60%LF.

trent1000 · Mon Jul 21, 2014 11:23 pm

Quoting AA2MM (Reply 22):
Would anyone know if Thai Immigrations have waived the Bht1000 visa fees for foreign guests upon arrival ?
They have done that many times when travel was slow.

Thailand has not and does not charge visa fees on arrival. There is a departure tax added to tickets, so cash is no longer payable on departure.

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