Politics, economy put profits down: Thai Air


Carrier says Cambodian officials no longer booking flights

Thai Airways International Pcl aircraft sit parked at Bangkok’s Suvarnabhumi International airport in November. The closure of the airport due to protests at the end of 2008 is still hurting the airline, said Thai Airways General Manager for Cambodia Narinthorn Purnagupta.BLOOMBERG

Normally, we coUld say [the government] would book with Thai."

THAI Airways suffered a drop of about 15 percent on passenger loads and revenues last year on its Cambodia route, the carrier’s general manager in Phnom Penh said Thursday, blaming the economic crisis and fallout from the recent political spat between Prime Minister Hun Sen and his counterpart in Bangkok.

Narinthorn Purnagupta said the deterioration in diplomatic relations between the two countries has had a negative impact on Thailand’s national carrier – a trend that began with the closure of Bangkok’s Suvarnabhumi International Airport by political protesters in late 2008, adding that Cambodian government officials have stopped booking official flights on Thai Airways.

“Normally, we could say they would book with Thai [Airways],” Narinthorn said, adding that their names had not shown up on bookings recently.
Government officials denied Thursday there was any boycott of the carrier in place.

“We warmly welcome Thai products,” said Council of Ministers spokesman Phay Siphan. Economic relations between the two countries, he said, “is normal”.

Ministry of Foreign Affairs spokesman Koy Kuong said that there is “freedom of choice” to select any airline on government visits abroad based on price, convenience and quality of service.

Thai Airways is the only non-point-to-point airline that flies between Bangkok and Phnom Penh, the main reason behind the airline’s decision to target long-haul passengers in a bid to expand operations in the Kingdom, Narinthorn said.

Thai Airways’ slump – which saw passenger loads average just below 65 percent on Cambodia routes in 2009 – was worse than the industry average.

Ministry of Tourism data showed air passenger numbers fell an annualised 11.6 percent for the first 11 months, but the whole year’s numbers were likely to have been improved – the base figure for the end of 2008 was low due to the onset of the global economic crisis, while November’s drop in air passengers was just 2.8 percent year on year.

The drop in Thai Airways cargo traffic was much sharper, said Narinthorn, as volumes fell between 50 and 60 percent.

“The garments have gone,” he said, referring to Cambodia’s main export product.

The situation had shown signs of improvements in the second half, he added.

Thai Airways fell about 13 percent below revenue targets for its Cambodia operations in 2009, Narinthorn said, although the airline has raised this figure for 2010.

“We believe this year will be much better,” he said, without giving an exact figure.

Cambodia’s GDP was expected to contract 1.5 percent last year, according to the London-based Economist Intelligence Unit’s January outlook, with the economy forecast to rebound with 3.3 percent growth this year.

Nevertheless, competition among airlines in the region is increasing.

A manager at Vietnam Airlines in Japan said Tuesday that Vietnam would aim to become the regional hub for travel to Cambodia and Laos.

Narinthorn said he was happy for Vietnam to challenge Thailand for the Cambodia market, but that regionally Thailand’s position was secure following extensive investment – particularly in Suvarnabhumi Airport – and because of the country’s location within Asia.

“Geography is helping us,” he said.


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