Asian carriers in dire straits; cutbacks keeping tourists away

Monday’s announcement by Taiwanese-owned EVA Airways to cut back its international flights by up 10 percent in a cost-managing exercise due to soaring fuel costs has added to the jitters in Asia’s aviation industry.

The International Air Transport Association (IATA) has warned high fuel costs may see further carriers cut, or completely stop service. In the first six months of 2008 25 airlines went bust, or stopped operations.

After reporting a US$1.87 billion loss in 2007 and a further loss of $75.27 million in the first three months of 2008, EVA Airways has announced it will further eliminate up to 80 flights. “Our long-haul flights, in particular to Amsterdam, Los Angeles and San Francisco will be the most affected,” said a spokeswoman for the carrier. “We expect the flight cuts will alleviate pressures from high fuel costs.”

Asian carriers have been paring back fuel-guzzling international flights as a stop-loss measure to keep afloat since surging oil price hit a high of $147 per barrel..

Another Taiwanese carrier noted for its trans-Atlantic service, China Airlines, cut its monthly flights by 10 percent starting last month.

As part of its “turnaround” plans, Malaysia Airlines axed 15 loss-making routes mainly to China and India, including minimizing operations, under new CEO Idris Jala.

While leaders from eight developing Islamic nations (D8) meeting in Kuala Lumpur were calling for an “immediate and concerted effort” to tackle the global energy and food crisis earlier this month, ASEAN neighbor Thailand was grappling with “storm clouds” circling above its aviation skies.

Forced by skyrocketing jet fuel prices and slow passenger traffic, Thailand’s four airlines have started cutting routes and flight frequencies, including popular long haul flights.

With many flights to popular holiday destinations to the country affected by cut backs of both short and short haul flights, there is now a real fear its tourism industry is looking at an “quiet summer” ahead.

The country’s tourism industry is expected to see a reduction of inbound tourists from 17 million targeted to 15 million tourists this year.

The Association of Thai Travel Agents has been informed “several” major carriers, including the country’s national carrier Thai Airways and Lufthansa plan to cut long haul flights due to an expected drop of about 12 percent inbound tourists.

“Despite increasing fuel surcharge from US$60 to $281 per ticket, and flying almost full capacity for the Bangkok – New York flight, the Airbus A340 with 275 seats which needs more than 210,000 liters of fuel for the flight is losing money on the route.”

Thai Airways is now looking for buyers for its four Airbus A340 jets.

“The era of ultra long haul flights has come to an end,” Pandit Chanapai, Thai Airways vice-president told Bangkok Post. Thai Airways stopped its Bangkok -New York route on July 1, while the Bangkok – Los Angeles and Bangkok – Auckland routes will have stop-overs.

Low-cost carrier Nok Air, 39 percent owned by Thai Airways, was saved from being closed down last week after registering almost $3.5 million losses.

The carrier has now reduced flight frequencies to 32 from 52 flights a day, at the same time canceling its international routes to Bangalore and Hanoi.

Thai AirAsia, the joint-venture carrier based in Thailand set up by Malaysia-owned AirAsia, which currently flies to 10 local and 11 international destinations, has announced cancellation of its weekly light to Xiamen, China due to lack of passengers. It has also reduced daily flights to Yangon to four a week for similar reasons.

One-Two-Go, Thailand’s first low-cost carrier, has also cut its short-haul flights to popular holiday destinations Chiang Mai, Phuket, Hatyai, Chiang Rai and Nakhon Si Thammarat from 28 per week to 21.

The Tourism Authority of Thailand (TAT) plans to organize 14 roadshows in 2009 under its “Visit Thailand Year” promotion, including six in North Asia, four in South Asia/ASEAN, three in Europe and one in the US.