THAI to tap regional market

business August 18, 2014 01:00

By Sasithorn Ongdee,
Suchart Sri

6,086 Viewed

New route network, new aircraft as airline unveils bold NEW strategy

Thai Airways International (THAI) will focus on increasing flight frequencies on regional routes to tap higher travel demand and provide better services with a number of new aircraft to substitute for decommissioned ones.

As part of the 2014-18 rehabilitation plan approved by the board last week, the carrier would improve its fleet of aircraft, setting a target to have 103 in 2018 with an average age of 7.4 years, compared to its current 99 with an average age of 9.3 years, a company source said.

THAI would gradually decommission 32 old aircraft while adding 37 new ones – under the five-year aircraft-acquiring programme – to its fleet.

Out of the 37 aircraft, 28 have yet to be delivered. Thirteen will be acquired on a financial lease basis and 15 via operating leases. Fourteen aircraft will be delivered this year.

“It is possible that the company will shorten its aircraft-acquisition plan from 10 years to 5-8 year because of the financial situation. The long-term plan may not be flexible,” another company source said.

As part of its aircraft-acquisition plan, the first Boeing 787-8 Dreamliners has been already delivered and is being used on the Bangkok-Chiang Mai route until September 10 as promotion prior to be flown on other routes to Perth or Haneda.

The airline is set to sell its Airbus A330s and Boeing 777-300s and 777-400s, the source said.

The airline’s projection for 2018 is 47 million regional passengers, up 2.6 per cent, 11 million intercontinental people, up 6.4 per cent, and 25 million domestic people, up 4 per cent.

From 2014 to 2018, the carrier will increase flight frequencies on regional routes, especially on those routes that are profitable. In 2018, the carrier expected to provide 1,035 flights a week, up by 25 from its current figure.

The carrier will also acquire new aircraft in the long term to continuously substitute for decommissioned aircraft in response to higher travel demands.

THAI will strengthen its route network in major markets to keep its leader position as well as spreading its routes in surrounding areas by taking advantage of the Fifth Freedom of the Air. It would also adopt the multi-base airport concept and employ multi-brand strategy to tap into all market segments.

The source said, however, what the carrier would implement with its 2014-16 turnaround plan included increasing flight frequencies on profitable routes such Bangkok-Yangon and Bangkok-Sapporo and reducing or cancelling flights on some routes such as Bangkok to Sendai and Taipei.

As for new aircraft, the carrier would acquire the same model in order to reduce maintenance expense, said the source.

“THAI plans to use the new generation Boeing 787 to fly on the long range and highly profitable routes such as Bangkok-Perth and Bangkok-Narita,” said the source, adding that it can help save up to 15 per cent in fuel costs.

Under the 2014-18 strategic fleet expansion plan, THAI has segmented its markets into four main groups.

First, those where THAI is the market leader such as Scandinavia, China and Japan where the carrier will focus on maintaining its leading position by increasing flight frequencies provided with modern in-flight equipment.

Second, those that are considered highly competitive markets such as Singapore, Hong Kong and Asean members. In this market segment, the carrier would join hands with its alliances to increase a number of flights connecting passengers at Subvarnabhumi Airport. It would also make use of its budget regional sister airline, Thai Smile, to protect its short-haul market share in the region.

Third, those where THAI’s rivals are strong such as Russia and the United Arab Emirates where the carrier would monitor closely so it could flexibly change aircraft in a bid to be competitive.

Last, those that are considered to be potentially emerging markets such as India (Kochi and Amritsar), Eastern European (Vienna), and China (Hangzhou, Shenzhen, and Shantou) where the carrier would study the market for further market expansion.