TG: BRU not profitable, could be axed

[Flanker2]

The State Enterprise Policy Committee has approved in principle Thai Airways International's rehabilitation plan, which was discussed in a meeting on Monday chaired by the prime minister.

Measures will include a reduction of the airline's staffing by 5,000 and cancellation of its non-performing routes.

THAI is one of even troubled state enterprises. In the first nine months of 2014, the airline suffered losses of Bt9 billion. It recorded a loss of Bt12 billion in 2013.



The rehabilitation plan will see its workforce slashed from 25,000 to 20,000.

The BangkokJohannesburg route was already cancelled on January 15 and the BangkokMadrid, BangkokMoscow, BangkokLos Angeles routes are likely to be axed in the second quarter of this year.

Decisions on routes that do not make a profit but are considered to have potential will be made in the fourth quarter. They include Bangkok-Rome, Bangkok-Milan, Bangkok-Brussels, Bangkok-Brisbane, Bangkok-Sapporo, Bangkok-Colombo, Bangkok-Denpasar and Bangkok-Hyderabad.

http://www.nationmultimedia.com/nationa ... 52743.html

[sn26567]

As mentioned in another topic, TG may start to feel the heat of the Middle East airlines...

[RoMax]

It's not a matter of 'may start to feel', they are getting hard punches in the face by the MEB3 carriers on the Europe-Thailand market (among others) and it's not new, but things are getting harder.

In case of BRU at least it's good that they see it as a route with potential despite the current losses. But if Etihad executes its plan to go up to 14 flights per week (or better say, gets the rights for it) with already daily QR and EK as well (and I wouldn't be suprised to see EK upgrading or at least pushing for even more traffic rights), it will only get harder for Thai.

[travellover]

The title doesn't accurately reflect the informations.
So everything isn't lost yet ! Let's cross fingers such an iconic airline will not disappear from BRU landscape !
Unprofitable but with potential : wich potential ? Do they miss high yield passengers ? The planes are usually full. Do they lack corporates and high yields passengers ? And what about the tour operators ? The fret and the code sharing with SN and * ?

[Atlantis]

The case of BRU is different.

A route is profitable after some years. TG started not that long time ago to fly to BRU, so they need time.
OK, the ME carriers are here too but the planes of TG are also mostly full, so.....

[RoMax]

A route is profitable after some years. TG started not that long time ago to fly to BRU, so they need time.
OK, the ME carriers are here too but the planes of TG are also mostly full, so.....

Thai launched in November 2011, they should be past the initial start-up period for a long haul route. Besides, I heard them commenting in 2013 and maybe also 2014 that BRU was a successful route with the potential to be upgraded to daily. Quite a different story from the current statement of it being a loss-making route despite its potential.

What they mean with that potential no doubt is the fact that Belgium-Thailand is a big market, though one with overall low yields (not unique to Belgium-Thailand, most of Europe-Thailand faces this problem). Combine that with the ever increasing MEB3 competition (how much did it increase between late 2011 and now? At least the daily T7 of EK which is quite a lot of capacity).

I fear the worst. It would be ok for them if Thai as the whole company wouldn't be in serious difficulties, but now they might give up earlier than in the situation of them being a healthy airline.

[Atlantis]

A route is profitable after some years. TG started not that long time ago to fly to BRU, so they need time.
OK, the ME carriers are here too but the planes of TG are also mostly full, so.....

Thai launched in November 2011, they should be past the initial start-up period for a long haul route. Besides, I heard them commenting in 2013 and maybe also 2014 that BRU was a successful route with the potential to be upgraded to daily. Quite a different story from the current statement of it being a loss-making route despite its potential.

What they mean with that potential no doubt is the fact that Belgium-Thailand is a big market, though one with overall low yields (not unique to Belgium-Thailand, most of Europe-Thailand faces this problem). Combine that with the ever increasing MEB3 competition (how much did it increase between late 2011 and now? At least the daily T7 of EK which is quite a lot of capacity).

I fear the worst. It would be ok for them if Thai as the whole company wouldn't be in serious difficulties, but now they might give up earlier than in the situation of them being a healthy airline.

So it's 3 years that they are flying now on this route and that's the period you need to see if you make profit on it or not on a long haul route.
We will see what the future will bring but be sure that BRU will not let go TG that quickly. It's a great route with a lot of potential and it's a Star Alliance member.
Wait and see.

[Flanker2]

Frankly the problem is that the ME3 have hired people who understand the concept of yield management.
TG and many others like SN (more so in the past than in the present) want to make profit on every seat they sell.... and this is the problem. They end up with several seats sold at a profit versus CASM, and a whole amount of seats not sold.
Then they think that it's systematic and try to fill unsold seats with low yield tourist groups.
If you add everything up, the trip ends up loss-making.
Personally, I prefer the ME3, TK and Ryanair way. Make sure you break even first by selling sufficient amounts of seats first, then make money on the last 20% of seats sold.

TG is also very lazy. They can connect an entire network beyond BKK from BRU, but they're asking stellar fares or not offering the right schedules. And their website takes forever to load...

I don't think that there is anything wrong with the title.
BRU is not profitable, and there is a possibility that it will be axed, according to TG.
Why do people always have to see a problem where there isn't one? Language barrier?

[sn-remember]

BRU-BKK is a route that has potential ..
I know lots of people who wouldn't consider a stop in the gulf on a 12 hrs route. Too much hassle .. and fatigue plays a role.
Add a nice enough Y service and a not too heavy a premium for the unique non-stop offering.
However if they want to lure the business pax, they should go daily.
And synchronise the flight with the various feeding banks in BKK and BRU, both in the star alliance.
Heck, on SIN alone you have quite a healthy demand from BRU, not mentioning HKG.
Indeed.. starting a route is always costly and countering the cannibalisation from the ME carriers is a huge challenge. But if they can't make BRU work, I am very skeptical about the future of their european network as a whole.
They might end up like other carriers, serving a ME hub and that's it. See QF, AZ, MH in the near future etc ..
I'm sure changing the schedule, the a/C (a smaller frame like the 788 ?) and going daily together with better pricing and marketing could do the trick ?

[sn-remember]

We 'll continue seeing them at BRU I'm sure

[sn26567]

TG should in all cases be cheaper than the Middle East airlines: Thailand is a low cost country, and flying non-stop is cheaper than making a stop (and a detour) in the Arabian peninsula. What is their problem?

[Desert Rat]

Management...and politics...

After the 4 340-500 3 years ago, TG has decided to ground the remaining 6 -600's from 29th of March this year.

They should be advertised for sale soon...good luck to find a buyer.

Off topic, CES -600's are being bought by Boeing...^^...

[LJ]

BRU-BKK is a route that has potential ..
I know lots of people who wouldn't consider a stop in the gulf on a 12 hrs route. Too much hassle .. and fatigue plays a role.

You can always make a stop in CDG, FRA, MUC, IST, LHR or AMS. The fact is that tehre is a lot of suuply between Eurpoe and Thailand and given the economy in Thailand not much high yield traffic.

Heck, on SIN alone you have quite a healthy demand from BRU, not mentioning HKG.

But why go via BKK if you can fly more efficient via FRA, LHR, CDG or AMS? It's not only the ME3 which compete with TG, its all the European airlines plus the Asian ones. Moreover, It wouldn't surpise me if Lufthansa's long haul LCC will start flying to BKK (not very good for TG).

Indeed.. starting a route is always costly and countering the cannibalisation from the ME carriers is a huge challenge. But if they can't make BRU work, I am very skeptical about the future of their european network as a whole.

Why is BRU so special for TG? Scandinavia is despite the growing competition from the ME3 still more interesting to TG than BRU as the options for those in Scandinavia are more limited. Paris is larger than BRU (hene the A380) and why they fly to LHR and FRA is obvious. BRU is not pivotable for TGs Europe plans thus retracting from BRU doesn't say much about TG in Europe.

[sn26567]

When TG started flying to BRU, Thomas Cook (Belgium) was an important customer, whereas Jetair was flying with its own airline to BKK and HKT. Jetair has since that time stopped flying to Thailand and I don't know how they send their customers to Thailand. I don't know whether Thomas Cook still uses TG; maybe they use Condor out of FRA now. Can somebody tell me about the current situation of the two large Belgian tour operators with regard to their customers to Thailand?

[cathay belgium]

Hi,
A collegue of me is flying out on Thailand with Etihad in easter, guess it was Thomas Cook...

CXB

[Flanker2]

Why is BRU so special for TG? Scandinavia is despite the growing competition from the ME3 still more interesting to TG than BRU as the options for those in Scandinavia are more limited. Paris is larger than BRU (hene the A380) and why they fly to LHR and FRA is obvious. BRU is not pivotable for TGs Europe plans thus retracting from BRU doesn't say much about TG in Europe.

BRU is special IMO in that it's underserved to Asia, except through the other European hubs, TK, SU and ME3's for lack of direct routes from the Belgian airline.
I guess that the first tier routes are fine, but all these second tier routes are at risk, simply because TG is lazy and is trying to work mainly with O&D.

I find a similar attitude at JL/NH in Japan, who are not leveraging their superior product offering and weak currency to offer connections to Southeast Asia, Oceania, and even North-east Asia that they offer with excellent frequencies. NH could easily offer 2-stop China to Africa connections via NRT and BRU much better than any Chinese carrier. Together with O&D to BRU and some feed from SN, they could easily make good money with a B789.
This is why I explain NH opening DUS before BRU, while BRU has similar O&D but much better potential for high-yield connections.

[LJ]

I find a similar attitude at JL/NH in Japan, who are not leveraging their superior product offering and weak currency to offer connections to Southeast Asia, Oceania, and even North-east Asia that they offer with excellent frequencies.

If you're flying to SE Asia, it's not such a good idea to use NRT as a transfer station (at least not from Europe). Too much of a detour. Moreover, why focus on low yield connecting traffic when you can get the seats filled more profitable with traffic to/from Japan? Unfortuneatly TG doesn't have much high yield O&D. Furthermore, competition between Europe - SE Asia is fierce and do you really want to chase even lower yield passengers?

This is why I explain NH opening DUS before BRU, while BRU has similar O&D but much better potential for high-yield connections.

They fly to DUS due to the very healthy O&D, not high yield conencting traffic. Some rumours suggest that AMS will be announced before BRU, but that has been proven a rumour so far.

When TG started flying to BRU, Thomas Cook (Belgium) was an important customer,

Maybe good for pax number, not good for yield. One can compare TG with MH. Both airlines usually have high load factors, both have low yield and both have financial problems (though those at MH are much worse). The current economic climate will be a challenge for TG and I doubt that BRU would do good with a better Thai economy. Apparantly it's not doing so great at the moment (though they haven't cancelled BRU yet).

[b-west]

To be honest, who goes to Thailand? O&D are mostly tourists; quite often of the...hmmm... greasy kind... (I shouldn't talk; I'm going there next week). But the people going there are usually interested in only one thing: "get me there cheap". And if the ME3 offer cheap connections to Thailand; the standard Thailand traveller doesn't mind spending a few hours sitting on the carpet in DXB, AUH or DOH.
TG could and should probably focus more on connecting pax to SIN, HKG or even Japan. (hey; for once I agree with Flanker). Why don't they? Who knows? They assume the O&D is enough for them? Or maybe LH and the likes have the connecting pax covered and TG is having a hard time getting into that market? Even SN offers a codeshare to SIN on LH metal...

[White Light]

To be honest, who goes to Thailand?

Reason enough for TG not to think of O&D and tourists only, but to develop connections.

the people going there are usually interested in only one thing: "get me there cheap". And if the ME3 offer cheap connections to Thailand; the standard Thailand traveller doesn't mind spending a few hours sitting on the carpet in DXB, AUH or DOH.

Unfortunately, there is a double contradictory logic prevailing in the airline industry :
1. if you want to fly nonstop, you have to pay more (even if it's cheaper for the airline)
2. if you agree to fly via a hub and spend more time travelling, you pay less (even if it's more expensive for the airline).

If TG offered the same fares as for instance the ME3 to Thailand (and onwards), they could probably fill a daily flight to BRU, but TG is expensive on most of its routes and types of fares.

TG could and should probably focus more on connecting pax to SIN, HKG or even Japan

I have a doubt about Japan, but SIN definitely, as well as Malaysia, Indonesia, Australia, New Zealand and even Cambodia and Vietnam (although I could not check connections on TG's web site), but there must a potential if fares are competitive (Thailand has low labour costs, probably even lower that in the ME).

[Ozzie1969]

Is everybody forgetting the Philippines? There must be over a million Filipinos in Western Europe, not counting their European-born children and naturalized Filipinos. Whether that is enough to sustain links between Europe and the Philippines through Thailand is a question I don't know the answer to, but I do know that every flight I ever took towards the Philippines was always full.