Sunday, April 12, 2015

Thai Airways to retire 22 aircraft in 2015

Thai Airways has officially announced that in order to rapidly accelerate cost saving measures as part of its 3 year turn around plan, it shall speed up the process by phasing out 22 wide bodied aircraft in 2015 alone which are as follows:

8 B744s + 2 B744Fs + 6 A346s + 6 of its oldest A333s

As a result of the 2 B744 freighters (744Fs) being retired, it will mark the end of Thai Cargo operating as a seperate entity as the airline looks to use the belly space of its B777, A330 and B787 for the uplift of commercial cargo.

FYI in 2013, TG lost $392 million versus $482 million in 2014 operating with 102 aircraft (82 of which were wide bodies)!

  1. A well thought out move by TG's management concerning the fleet in addition to suspending JNB, DME and MAD flights this year as well. However, there are few additional items that need to be considered and implemented:
  2. LAX flights need to be suspended in 2015 too as they utilize 1.5 aircraft for only a 4 weekly service hence an inefficient way of utilizing an asset. In addition, this route is a major loss maker i.e. even bigger than MAD/DME hence just like its fellow rival Malaysia Airlines also swallowed its pride and suspended LAX, Thai too needs to bite the bullet by following suit. 
  3. TG needs to also to maintain its brand and image reputation by continuing to operate as a legacy carrier and not confuse itself + its passengers with a dual brand strategy with its Thai Smile LCC. It just needs to look at other major legacy carriers who have experimented with the same strategy and failed i.e. UA, DL, 9W, AC and JAL to name a few.
  4. The 20 A320s of Thai Smile should all be leased out to interested airlines in Asia or TG should instead dry lease in 10 A321-200s with one ACT. These A321s can fly easily up to 6 hours nonstop from BKK airport and help reduce operational costs significantly on ASEAN + Indian subcontinent routes where mutiple daily frequencies using a B777/A330 is not always required + some routes that are operated on a daily basis using a wide body would do better with an A321. 
  5. The A321 to begin with should be configured to seat 12J + 168Y in a dual class (180 seats total) layout easily. Its total cost of operations is $5000 less per hour on average (50% less) than an A333/B772 and can also in its belly carry 3.5 tons of cargo. It would be more commercially viable for TG using this aircraft type on routes such as CMB, HYD, ISB, CCU, BLR and secondary cities in China rather than the wide body aircraft. In addition, this aircraft is also ideal in fine tuning capacity, for example its current BKK-SIN service is flown 5 times daily but at least 3 of these flights can be easily operated at full S/F using an A321 rather than a 50-60% A333/B772! A route such as DPS + MNL which is only operated once daily, can be instead flown twice daily comfortably with an A321 thus in turn providing more schedule flexibility for P2P pax + better network feed especially for EU/DXB bound flights. SGN + HAN currently flown double daily with a wide body, can easily support a triple daily flights on their own using an A321 due to the massive O&D demand to Thailand and East Asia itself + EU! On the domestic front, in order to increase market share and operate in a more efficient manner on the popular BKK-HKT sector in particular where it currently flies 8 times daily with B777/A330s, it can do so 10-12 times daily using an A321 with peak time flights operating as a shuttle service for both business + leisure pax.      

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