News

Confirmed: Thai drops all US non-stop flights

9 Jun 2008 by Mark Caswell

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

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