[Anonymous]

[BusinessTraveller]

In a way, the news that Thai will bring its A380 into London Heathrow next December should come as a surprise.

Only last March at a media event in London attended by Business Traveller, Thai Airways was trumpeting the fact that the London route would be getting its newly refurbished B747-400s.

But why has Thai taken so long in launching its 507-seater A380 on Bangkok-London, traditionally its most important European destination? With hindsight, Thai probably wishes it never did order six A380s way back in 2004.

As with MAS (Malaysia Airlines), the superjumbos were ordered to see service on the voluminous kangaroo routes linking Europe with Australia.

But nine years is a long time in aviation and in the meantime the fast-growing Gulf carriers have siphoned off many passengers heading to or from Australia who, in days gone by, would have patronised either Thai or MAS.

It’s a particular problem here in the UK because the Gulf carriers serve regional points in addition to London.

For example, Thai can only provide passengers with departures from London Heathrow whereas Emirates can sell Bangkok, Sydney and so on (via Dubai) out of London Heathrow and Gatwick plus Birmingham, Manchester, Newcastle and Glasgow.

In addition, UK regional departures are also available from Gulf rivals Etihad and Qatar Airways.

It means that the A380s ordered by Thai and MAS are simply too large for their kangaroo route market share.

According to a report in the industry magazine Aviation Week, Thai’s executive VP of strategy of business development Chokchai Panyayong said: “Thai will not compete head-to-head with the Gulf carriers in the crowded kangaroo route from the UK to Australia… [but] even though our market share has deteriorated we continue to maintain our presence.”

MAS faces a similar problem. Its small fleet of A380s are currently limited to plying between Kuala Lumpur, London and Paris in between fitting in a daily return trip to Hong Kong.

Yet only last year, MAS intended to operate a through A380 service linking London with Sydney and Melbourne. According to the Australian business media, plans were drawn up for A380 services into Sydney to start in November 2012 with Melbourne to follow in March of this year. Both plans were axed owing to weak demand.

For its part, Thai currently operates A380 services into Frankfurt and Paris. Within Asia, its A380s link Bangkok with Hong Kong and Tokyo Narita.

Will these carriers ever operate their A380s Down Under? Well, it remains to be seen how the market will develop. But the Gulf carriers are likely to provide even tougher competition thanks to Emirates’ tie-up with Qantas and Qatar’s impending membership of Oneworld.

Interesting times lie ahead.

Alex McWhirter

[sparkyflier]

And I suspect even more competiion on the way from China Southern!

[FrasierForum]

Alex .. I gather Malaysia Airlines has not been able to operate its A380 on flights to Melbourne and Sydney due to the existing air services agreement between Malaysia and Australia – which limits the number of seats it can operate into both cities due to AirAsia also operating the same routes from KL. As a result, if MAS chooses to operate the A380 on either route, it would have to concede its double daily frequency as a forfeit.

Demand on both sectors remain high and not weak as you have mentioned.

Coincidently under the same agreement, Adelaide is the only city served where MAS is not seat restricted.. Although i doubt we’ll see A380 there anytime soon…

[Ab0dache]

Alex… you have an interesting point here focusing on the UK-kangaroo route and Thai/Mas.

SIA & Emirates seems to do well with their A380. It is worth noting that Qatar has not ordered that much of this plane.

It does not appear to be that easy to fully utilise the A380 for other airlines aswell.

China Southern cannot do what they want with it for political reasons.

Air France has asked to have some delivery delayed. The current financial position may explain it for sure, but… Is there enough passenger to fill the plane on all routes? I remember that the plane was supposed to be on the Paris-Montréal route. I think it was there for a short period of time. But it is not anymore. There are no gulf carrier on this route but the competition is still tough enough between the Canadian (not only AC) & the French airlines (not only AF) that the need of the A380 on the route was useless.
I read somewhere -not sure if I can rely on it- that some crew starts to dislike the A380 as there are too much passengers to serve in economy. It sounds like a less enjoyable work for them that being on smaller aircrafts.

Amazing news aswell when you report Lufthansa is to retire their B747-8 in 2020. Are some aircrafts too big or too expensive to run for some airlines or routes?

Yes interesting times lie ahead.

[AMcWhirter]

Hello FrasierForum

Thank you for pointing this out. I guess I shouldn’t automatically have assumed that MAS faced weak demand on its flights between KL, Melbourne and Sydney.

But it just goes to show how things can change in the aviation industry. The marketplace changed between the time the A380s were ordered and the time when they were delivered to MAS.

MAS ordered its A380s in 2003 at a time when Air AsiaX (the long-haul division of Air Asia) was unknown. Air AsiaX itself didn’t fly to Australia until November 2007 and has only served Sydney since 2012.

[Edski777]

It seems that airlines are gambling on an ever increasing demand. And, yes, they have to plan ahead as planes take quite a while to be delivered. In the mean time market conditions can change for better or worse.

But is this only a problem for Asian carriers like Thai and MAS? I doubt it. They are based in a region where economic growth is still high, the middle class, their main target as far as travel is concerned, is growing quite rapidly.
Also the leisure market is booming. More and more people from the EU vacation in the Middle East, Asia and Australia. People from Asia are travelling in large numbers to Europe.

Airlines are planning ahead and invest in planes that will be operated for at least the next 20 years or longer. Capacity is set to increase, but for the most popular destinations and hubs there are limited slots available. The solution: bigger planes.

A situation is developing much like in the 1970’s when wide body planes like the 747, DC-10 and L1011 came on line. The question then was the same as it is right now: how are they ever going to fill these planes?
The main answers: mobility increased and prices fell. People started to fly and kept flying ever more.

I believe that the market will eventually be big enough for most airlines to fill their planes. I am not so sure all airlines will survive. But then again that was the same in the 1970’s and 1980’s.
Now I think the competition will be on price and service.

A battle where European airlines are at a disadvantage compared with Middle East carriers, because of their access to cheap money, low cost of labour and oil, and the Asian carriers because of the level of service and cheap labour.

Looking at for instance the Kangaroo route I feel that carriers like Qantas, Virgin and BA are at risk. Qantas and Virgin have recently signed deals with Middle East carriers to stay in the competition, but hand over a substantial amount of marketshare on this route. BA lost a valuable partner in Qantas and seems to be cutting back on this route. This will probably be substituted as QR joins One World, but what is in it for BA? Is for instance the British market big and loyal enough to keep flying home carriers or will they choose other options available?
Will European carriers be able to fill all their seats on routes to the Middle East and Asia where they are in competition?

I think the risks being taken are not with the likes of Thai and MAS or for that matter SQ, CX, EK, EY, QR, etc. We should take a look a lot closer to home and come up with a solution to counter that threat. And fast.

[MartynSinclair]

Perhaps Thai are preparing for the BA defectors when the 747, is replaced by the 777…..in October…

[Alasdair]

I tried just last week booking MAS at the end of June to LHR and could not get seats for my family. A sign of their success?

[TominScotland]

Alex, you rightly point to regional options in the UK with the Gulf carriers. Prior to the demise of bmi (when Thai woiuld have placed their A380 order), there would have been Star alliance code-share possibilities to LHR and onwards with Thai. Unliess they tie in something with Virgin, Thai no longer have those connections to hand.

In theory, MAS should be able to lever onworld connections from the UK regions (and near-Europe) with BA but there does not appear to be much movement on that front.

[IanFromHKG]

Edski777 – 04/06/2013 20:15 GMT : A battle where European airlines are at a disadvantage compared with Middle East carriers, because of their access to cheap money, low cost of labour and oil, and the Asian carriers because of the level of service and cheap labour.

Cheap money – have you noticed prevailling interest rates? They are incredibly low, even in Europe. Cheap oil prices will only work in one direction – any long-haul carrier flying from Europe will have to refuel there, and pay the same price as everyone else. I won’t comment on labour prices for ME carriers as I have no knowledge of those. However, in relation to your comments on Asian carriers… On both the last two flights I had from LHR to HKG, Cathay were using London-based crew. I can’t imagine they are much cheaper than London-based crew used by other airlines. And why on earth should European carriers necessarily be at a disadvantage to Asian carriers “because of the level of service” – that is something entirely within the control of the airline

[BigDog.]

As an aside Ian, am sure you are aware that Cathay is owned by Swire Group. Swire are headquartered in Westminster, London. James Hughes-Hallett the chairperson is British as is Chris Pratt, CBE the CX CEO and most of the CX Board. – things IAG cannot attest to.

[IanFromHKG]

Thanks, BigDog – I am well acquainted with Swire, and (happily) several of the senior people in it. The CX CEO, though – I have to correct you, he’s American 🙂

[BigDog.]

I stand corrected Ian, I assumed as Chris Pratt was Oxbridge educated plus a CBE he must have been British.

[IanFromHKG]

He is indeed, and an absolutely charming man. He’s the chairman, though – the CEO is John Slosar

[Author]

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