AirAsia Drops Xiamen Flights

By Boonsong Kositchotethana, Bangkok Post, Thailand

Apr. 15–The no-frills carrier Thai AirAsia (TAA) has dropped Xiamen in southeastern China from its network as it shifts aircraft capacity to two new routes that potentially offer greater economic returns.

TAA said it pulled the plug on its flights to Xiamen, which started in April 2005, due to higher operating costs, a limited load factor and a price war with Thai Airways International.

TAA executives described the withdrawal, effective from March 31, as a temporary suspension. But they gave no indication as to when operations would resume. Its withdrawal gave THAI opportunities to maximise traffic benefits from the route, which it flies three times a week.

The no-frills carrier believes it will be more profitable to use the planes on two new routes, Bangkok-Jakarta and Bangkok-Ho Chi Minh City (HCM), according to TAA chief executive Tassapon Bijleveld.

“With oil prices skyrocketing, the new routes seem to offer a better economic proposition,” he said, adding that jet fuel cost more China than in other areas where the airline operates.

TAA started flying daily to Jakarta on April 1 and to HCM on April 4, starting with two flights a week. It doubled those to four flights a week on April 27.

With Xiamen removed from its network, the only point in mainland China that TAA is still serving is Shenzhen. TAA inaugurated Bangkok-Shenzhen service in July last year.

TAA’s earlier plan to start flying from Bangkok to Guangzhou this year has yet to take off as the airline began to tread more cautiously on its expansion plan in the wake of a global economic slowdown and spiralling oil prices.

Mr Tassapon said the airline would look to consolidate operations on its existing network over the next two years, rather than aggressively pursuing new routes like before. Furthermore, the airline does not have the aircraft capacity to fly new routes, possibly to Bali, Dhaka, Kunming and India.

TAA is advancing the retirement of its Boeing B737-300 fleet and replacing them with brand-new Airbus A320 jetliners. By the end of next year, its fleet will consist entirely of A320s.

TAA has ordered 40 A320s, three of which were delivered last year. Five are due this year and five more next year.

Mr Tassapon said that the airline carried nearly 1.2 million passengers in the first quarter of this year with a load factor of 79 percent.

—–

To see more of the Bangkok Post, or to subscribe to the newspaper, go to http://www.bangkokpost.com.

Copyright (c) 2008, Bangkok Post, Thailand

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.