Thai dumps A340-500s, CAL, EVA, Air NZ cut-back, but Lufthansa expands


Thai Airways will cancel its non-stop services from Bangkok to New York and sell all four A340-500s, in response to surging oil prices. It is one of the most dramatic responses to high fuel prices by an Asia Pacific airline to date.

Thai is also reducing Los Angeles non-stop frequencies and re-routing the service via Japan with B777 equipment from the Winter schedule, as it takes the axe to its troubled ultra long-haul operation. Thai estimates that continuing the New York and Los Angeles routes would result in losses of USD120 million p/a. Further cutbacks by Thai are possible, as the airline reviews its widebody fleet requirements, including cutting its widebody fleet order.

China Airlines is cutting 10% of its passenger capacity, mainly to the US and Asia, from Jun-08, while EVA is trimming its passenger network by 5% from Sep-08. Both carriers can however look forward to increasing cross-Taiwan Straits services, with a crucial meeting this week expected to pave the way for weekend charters from next month and eased restrictions on Mainland visitor numbers to Taiwan.

Air New Zealand has announced some “tactical” changes to its network, mainly involving short-haul capacity cuts, as well as further fare increases. Jet Airways has also deferred the launch of services to Hong Kong until the Winter schedule.

These moves follow announcements in recent weeks by Singapore Airlines, Qantas, China Southern Airlines, China Eastern Airlines and Korean Air to cut some international routes in the face of surging fuel prices. Virgin Blue is expected to announce cuts to its network this week.

But other carriers are poised to expand their services in the region.

Lufthansa has no plans to cut services. Rether, it plans to increase capacity by between 5% and 10% annually in the Asia Pacific region over the next five years, including a 6-7% increase this year.

Tiger Airways meanwhile stated it is “waiting with bated breath to pounce on the routes suffering under higher fares, or simply abandoned by, Virgin Blue and Qantas/Jetstar”. The airline also foreshadowed an expansion onto international routes cut by rivals.

Tiger stated, “airlines that have lacked discipline to keep costs low are going to hurt the most during times of increasing fuel prices”.

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