This post is solely related to my analysis of network performances of two routes that I wanted to assess. Later on this week, I will cover some more news-heavy content pertinent out in the aviation world, but here are my thoughts for today:
For nearly a year now, I have been a huge fan of this website, also known as airlineroute.net. It is one of the best, most accurate and up-to-date resources related to flight scheduling, inventory and route updates, including information on capacity and equipment adjustments. I have encouraged many of my readers, particularly those with a focus on revenue management or network planning, to subscribe to their daily emails, which you can have delivered right into your inbox on weekdays. I used to always read it on the “L” on my way to work in the mornings, but now, I primarily work from home.
Los Angeles to Bangkok: big changes ahead
Anyhow, the first hot topic of this week was the announcement that Thai Airways Int’l is adjusting its nonstop LAX to Bangkok flights, effective later this spring, to go from a daily flight on an Airbus A340-500 series to a 4-weekly, “direct” flight on a 777-200ER via Seoul Incheon Airport in South Korea. Nonstop flights are nice, but 1-stop connections are a preferable change rather than having the airline leave the market entirely. And, as a trivia, before the advent of longer-range aircraft, Thai used to fly to LAX via Japan and South Korea anyways, so its almost like a switch back to the old way of doing things.
Truthfully, the move is not all that surprising given several factors. For one, it will provide huge savings on fuel costs by going less-than-daily and using the 1-stop method. Two, the Airbus A345 aircraft is old, and its Cost per Available Seat Mile (C/ASM) is notably higher than other long-range aircraft. Three, the traffic between LA and Thailand is likely not very high yielding, and load factors are reportedly in the low 70 percentiles. This is owing mostly to small business demand between the US and Thailand, a downturn in overall traffic due to political unrest in Thailand, and truthfully, the Thai population in the LA region isn’t really that large – only about 30,000 individuals. An ultra long-haul flight (ULH) cannot survive on tourism traffic alone in…
At present, the route is the seventh longest route in the world, according to this incredible compilation on airliners.net (and it is going to obviously change once routes like LAXBKK disappear or ORDDEL is axed, etc). But the larger question here is, which ULH flights are sustainable and which are not, given the current revenue and fuel cost environment?
At the end of the day, I respect Thai for making this tough choice. It is funny that this route decision actually comes with a few data points to turn to. Back in 2005, Thai launched nonstop New York JFK-Bangkok flights on the same aircraft (I remember seeing them one early morning in JFK as I arrived on the brand new Air India nonstop flight from Delhi). During that period, ULH flights were considered the “latest novelty” because they linked far-flung points in the world. The JFK-BKK nonstop was the fastest way to get to Thailand from the East Coast, and rumors were that ticket prices were as high as $5000 roundtrip in Economy, and load factors were in the high 90 percentiles!
Yet, Thai dropped the service in 2008 due to soaring fuel costs. Bottom line: it was bad (the bottom line – joke…get it??) Erm, anyways, the flight basically bled money. And then noticeably, Singapore Airlines, one of Thai’s fiercest competitors, had to reconfigure their Singapore-New York (Newark) and SIN-LAX flights to an all premium-class configuration in order to break-even!
Just comes to show what needs to be done with the going gets tough…
New York to Tokyo: Sayonara Narita, Konichiwa Haneda
Yesterday, bankrupt American Airlines announced that effective June 1st, they will be moving their daily nonstop flight between New York JFK and Tokyo from Narita airport to Haneda Airport. Haneda is actually the fourth busiest airport in the world, but it is slot-restricted by the Japanese government. SkyTalk, another airline-related forum from the Star Telegram of Fort Worth that I like to follow, reported that the carrier will still be making the switch effective June 1, 2012.
American was one of the US carriers to be awarded 1 of 4 slots to commence flights into Haneda airport, which is far closer to the city center in Tokyo and preferable for business travelers, back in 2010. Unfortunately, the route started literally weeks before the devastating Japanese earthquake and tsunami distasters occurred in March 2011, which crippled the performance of the flight. In September of 2011, AA received a waiver from the Department of Transportation to suspend the route until June 1, 2012, just to allow some recovery time before it re-commenced the flights.
Another reason why the route performed so poorly, people seemed to say, was because the flight timings were inconvenient per the options allowed for international carriers by the Japanese authorities. Foreign carriers were only allowed to arrive and depart between 10PM and 6:30/7AM, thereby limiting options for onward/inward connecting flights out of Tokyo, and also requiring very late arrivals and very early departures for passengers onboard this flight. British Airways, who also received a slot to launch a London Heathrow-Haneda flight, also complained that the slot timings they received were not ideal.
Interestingly, during the previous trial period, AA still simultaneously operated 6x weekly flights nonstop between JFK and NRT in addition to its JFK-HND route, but this time around, AA is putting all of its eggs into the Haneda basket by halting its JFKNRT flights altogether. However, the carrier will still be able to transport any passengers preferring to go from JFK to Narita on the nonstop flight operated by Japan Airlines, which has a joint business agreement with American. Below are the flight timings, according to airlineroute.net
AA135 JFK1855 – 2215+1HND 777 D
AA134 HND0650 – 0640JFK 777 D
My analysis is this: clearly, American wants to focus primarily on the Origin and Destination traffic (O&D) going from New York to Tokyo. Plain and simple. The inconvenience of the flight timings are outweighed by the benefits of Haneda’s proximity to the city. Lower-yielding connecting traffic still have the option to take the nonstop JAL flight over NRT to connect beyond Tokyo throughout Asia, and given the JBA agreements, AA can still earn revenue on those flights. Moreover, removing the AA JFK-NRT flight frees up a 777 aircraft to send to another route, that can hopefully earn more money.
I suspect we will continue to see some interesting network changes at American, but I am happy that they are making moves and trying some innovative methods rather than canning the process entirely and pulling out of Haneda given the results of the past experiment.