Thai Airways has now confirmed that it will cease its New York-JFK service at the end of this month (see online news June 3). It will also downgrade its LA flights from daily non-stop to a five times a week Boeing 777 service with an enroute stop in Osaka.
Quoted in The Wall Street Journal, Thai Airways’ president Apinan Sumanaseni says that “…the spiralling cost of jet fuel will force the airline to sell its fleet of four Airbus A340-500s [the planes which operate the above routes non-stop] which it bought three years ago for US$130m each. Without the cutbacks, the New York and Los Angeles routes would lose the company four billion Baht (GBP61 million).”
Thai’s non-stop US flights started as recently as December 2005. With distances of 8,270 miles for Bangkok-LA and 8,677 miles for Bangkok-JFK these are amongst the world’s longest sectors. At the time they were launched these services were praised for their time-saving convenience.
Although these flights are attracting plenty of passengers (it’s believed the planes are running 80 per cent full) the earnings are poor because Thai has configured its Airbuses with fewer premium seats than has SIA.
These ultra long non-stop flights are becoming a victim of high oil prices because they guzzle the gas. In comparison to a stopping flight a non-stop flight must lift all the extra fuel (required for the later flight stages) in the early flight stages. So a plane is effectively burning fuel to carry fuel.
SIA (which flies non-stop from nearby Singapore to LA and New York) hopes to get round this problem by turning its A340-500s into 100-seater all-business class flights to earn more revenue.
But that’s not a feasible option for Thai (which operates its A340-500s in a three class 215-seat configuration) because Bangkok isn’t a strong business destination.
At current prices, Thai is probably paying around GBP100,000 every time it refuels a Bangkok to New York flight with 56,000 galls of kerosene.
Based on full one-way fares, the maximum revenue Thai can expect to earn is GBP222,800.
But allowing for an 80 per cent load factor, discounts and so on, the actual figure may be less than GBP170,000. In other words, fuel forms a disproportionate amount of the flight’s operating costs and explains why Thai’s non-stop routes are losing money now that oil has risen so much in price.
Thai says its last flight out of New York to Bangkok will operate on June 30. The carrier says its non-stop A340-500 flights to Los Angeles will cease in September on an exact date yet to be finalised
For more information go to thaiairways.com.
Report by Alex McWhirter
