Thai Airways: The year for answers
Big questions are being asked of the Thai flag carrier this
year. Its strategies for dealing with some of the big challenges facing it in
2007 will have long-term consequences:
- Suvarnabhumi/Don Muang: The reopening of Don Muang Airport should crystallise Thai Airways’ domestic/short haul strategy. LCC competitors will resume operations there and aggressively grow point-to-point traffic. Thai must participate, but needs to decide whether its recently anointed “fighting brand”, Nok Air, is truly its best weapon in the LCC battle - and whether Nok Air becomes a serious international operation as well;
- Fleet: Thai has already made some good progress, thanks to a healthy compensation package from Airbus, but capacity is getting tight in the short-term. Orders for six A380s have been retained (with "compensation and various perks") and the carrier has also agreed to take delivery of eight heavily discounted A330-300s (reportedly less than USD90 million per aircraft, against a list price of USD140 million) over the next five years, which will help it retire its ageing A300-600 fleet. Overall, Thai plans to retire 24 widebody aircraft over the next five years, but there is not much spare capacity in its current fleet and average load factors are running at up to 80%. The 519-seat A380s will be delivered from Sep-10 (21 months behind the original schedule).
Thai Airways Monthly International Passenger Load Factors: Jan-05 to Nov-06
Source: CAPA DATA & AAPA
- Profits: The airline is on track to meet its full year net profit target of USD300 million, after reporting a first quarter profit of USD121 million. But achievement of the goal depends on a continuation of strong demand and moderate fuel prices, while a review to its ultra long-haul strategy, which lost millions last year on non-stop services to Los Angeles and New York, is also a vital issue for Thai to address.