Bangkok Airways plays safe

Bangkok Airways focuses on upgrading aircraft to sustain traffic on the current network.

Bangkok Airways says it has no definite long-term plans on expansion or new destinations, except for the possible resumption of its Macau service in Q4.

The airline cancelled its Macau service, late last year, in the face of unrelenting competition from Thai Air Asia, which operates three daily flights to the casino destination.

Faced by declining bookings in Europe -- its main source market for lucrative Samui and Siem Reap services -- Bangkok Airways is now concentrating on building local and regional business.

A long-term and ambitious plan to acquire the A350XWB for services to Europe is in the freezer and is unlikely to be back on the table until 2015.

However, it continues to take delivery of new aircraft that can be used in the current network. This month, the fifth of six new A319s will arrive. The aircraft has a two-class configuration , while the last one, due next year, will have a single-class. Overall, Bangkok Airways has ordered four dual-class A319s and two single-class versions.

The airline is going to return its two Boeing 717s â€" one in September and another in October. Also, it still has to decide whether to keep three A320s to cater for winter season traffic, instead of decommissioning two of them as earlier planned.

Bangkok Airways vice president â€" corporate communications, Nandhika Varavarn, told TTR Weekly: “We can no longer plan long-term because of a volatile environment, whammies coming up one after another. Also, long- term bookings are in decline. Our business plan is threatened by instability in Thailand, economic recession and the recent influenza threat. People tighten their belts and research more for value. We have to monitor trends closely.”

Ms Nandhika admits the performance is weak across the network.

 “All routes are affected. This year is the worst year on record. We have to work really hard to promote even Samui, which previously, sold itself.”

The airlineâ€'s management uses a network management tool that tags a warning to a route if it is not performing well.

“ If routes are hanging on the edge, weâ€'ll see what we can do to save them such as introducing fare promotions or advertisements. We try best to maintain a service through a season.”

Marketing strategies have changed to pay more attention to Thais, rather than relying mostly on foreign markets. And Ms Nandhika said that the more aggressive online promotions have proved effective. “We are happy with average load factor, though that didnâ€'t mean yield. We can not get everything, we have to understand that.”

During Q1, load factor of domestic routes was average at 75.33% compared to 69.33% of the same period last year and international routes, 60.98% against 55.77%. Internet sales contributes 20.83% from total passenger revenue.

Also from statistics of the airline, Thais still travel domestic and outbound but inbound traffic is less. From January to March, Thai passenger number increased as much 53.71% from 34,778 to 53,456; whereas, international passenger number dropped 25.71% to 199,790. In total, Bangkok Airways carried 298,136 passengers during Q1 comparing to 350,393 of 2008â€'s Q1 (67% international clients, 17.79%, Thais and 15.1%, unidentified).

Ms Nandhika commented that Thais travel more, domestically and regionally, not only because airlinesâ€' promotions but hotels and tourism related business also handing out bargains as economic recession impacted and Thailand double whammy with political turmoil.

In term of international tourists, she thinks although other countries are giving deals as well but Thailand is still a preferred choice; only our politics are stabilized.

Moreover, the political problem has impacted the airline as a feeder to neighboring country too. She cautions that if this last long, it surely affect Thailand as a gateway to Mekong region. Vietnam is a potential competitor because it is not far away from Thailand.

Furthermore, politics and pandemic have made it hard to organize events to stimulate travel. “It is not only pricing but people need reasons to travel so we have to create events. However, I have to postpone several events that were initiated with partners because when it was close to the date, something happened that caused cancellations.”

On the last note concerning the future of Siem Riep Airways, Bangkok Airways continues to serve Phnom Penh-Siem Riep route until Cambodiaâ€'s aviation standards are certified by EU, Siem Riep Airways would return to the sky.