Bangkok Airways’ struggle on international routes

By Luc Citrinot, eTN Staff Writer
Sep 15, 2009

BANGKOK (eTN) - Regional Thai carrier Bangkok Airways’ struggles with its international network under the combined factors of plummeting outbound travel from Northeast Asia and Europe, as well as increased competitions on regional routes, especially from budget airlines.
Following the closure of its route to Fukuoka in Japan this spring, Bangkok Airways has said it will suspend its services to Hiroshima from this winter timetable, which is now being served twice a week.

At the same time, it will also close down its services to Xian (twice a week) and Guilin (four times a week). These routes have particularly been affected since early this year by political turbulence in the kingdom and the spread of H1N1 virus, which translated into many cancellations from Chinese and Japanese travelers.

The airline is also suspending its Ho Chi Minh City flight, as it has to fight with low-cost carriers such as Jetstar Pacific and Thai AirAsia on the route.

The closure of HCMC-Bangkok puts a temporary term to the carrier’s ambition to be present in all Mekong countries. The “boutique airline” has been in fact hardly hit over the last two years by adversity. Its natural traffic to Samui has been eroded by political instability in Thailand and the deterioration of the Island’s image due to environment problems and over-construction.

It has also been confronted with increasing competition to most of its other routes –beside its monopoly position on Bangkok-Siem Reap. This monopoly is likely to soon disappear as Cambodia has its own national carrier and as Thai AirAsia has announced its will to fly Phuket-Siem Reap. The last big blow came in August following the crash of one of its ATR72 at Samui airport due to bad weather conditions.

It is perhaps time for Bangkok Airways to rethink seriously its strategy, especially in the spite of the economic crisis. An alliance with a larger airline could possibly help to alleviate Bangkok Airways’ difficult financial situation. Strong code share agreements have already been put in place with Air France/KLM as well as with Etihad.

However, the best solution would still be a stronger partnership with Thai Airways. Such an evolution would help to strengthen Bangkok’s supremacy as the hub to Indochina by allowing both airlines to really complement each other.

Thai Airways still does not fly to Luang Prabang and Siem Reap, two destinations flown by Bangkok airways. Both would offer ideal synergies with Thai Airways own network in Indochina. Bangkok Airways could then orientate itself to the model offered by Silk Air, Singapore Airlines subsidiary. Silk Air has prospered over the last three years despite low cost competition, thanks to its synergies with its parent company.

Such a new commercial approach- more in reality with a tough economic environment- would probably see the end of Bangkok Airways’ independence. But does the carrier have so much choice today?