Phuket Air to quit struggle to stay aloft

[Flashermac]

From The Independent

 

Flying on an old wing, leaky fuel tanks and a prayer: Phuket Air

 

 

PHUKET, Thailand (8 Apr 2005) -- When Phuket Air entered the highly competitive London to Bangkok aviation market last summer, it predicted success based on a winning formula of bargain seats, quality service and a "highly reliable" fleet of Boeing 747s.

 

Doubtless it was a pledge which offered some comfort to the 82 people who boarded flight 9R617 at Gatwick on Wednesday morning for the 15-hour journey to Thailand after a 12-hour delay. But an hour into the flight, words could no longer put the passengers at ease as their jumbo jet, emblazoned with the Phuket Air logo of a multi-coloured palm tree, shut down one of its engines at 35,000ft and the pilot began the process of dumping more than 50 tons of fuel.

 

For two hours, the passengers were confined to their seats while the ageing aircraft circled in the skies above West Sussex, repeatedly banking before returning to Gatwick. One witness said that as it came in to land, the jet appeared to have fuel flowing from its wings. Michael McElhinney, 50, a chartered surveyor, from Frome in Somerset, said: "I have never before seen such fear on the faces of the crew. It was the longest hour of my life: there were grown men weeping around me."

 

In addition to suffering from a damaged gear box seal, which caused the engine failure, a compulsory piece of safety equipment on the aircraft, known as a collision avoidance system, was found to be inoperable yesterday during a Civil Aviation Authority inspection.

 

The Department for Transport described the faults as "serious defects" and has ordered the plane (HS-VAN) to be grounded until it is repaired. Officials said they were in urgent talks with the Thai authorities over the safety record of Phuket Air.

 

By any standards, this has not been a good week for the four-year-old airline, which has expanded dramatically from a minor domestic carrier in Thailand to an international operator attempting to remould the aviation market by applying the low-budget model to long-haul routes.

 

On Sunday, HS-VAO, another of Phuket's fleet of Boeing 747s, all aged between 15 and 26 years, was twice forced to abandon take-off from Sharjah in the United Arab Emirates after a scheduled refuelling stop.

 

Passengers reportedly threatened to storm the cockpit of the aircraft after seeing fuel spilling for the second time from one of the wings as it taxied.

 

The airline later claimed that a small group of customers, some of whom were "typical drunken Brits", had panicked when excess fuel loaded in error had spilled from the wing via a surge tank, which was then emptied.

 

But the reassurance was not enough for the 366 passengers, who were forced to spend the night in a hotel while the aircraft was inspected and continued its journey to Gatwick the following day.

 

Even then a remaining group of about 200 passengers refused to board the plane, choosing instead to wait for another Phuket Air jumbo, coincidentally HS-VAN which is currently stranded at Gatwick, to arrive on its inbound journey from Bangkok.

 

Their problems were further compounded when the Boeing 747 developed a fault with its hydraulics systems, resulting in a further 16-hour delay. The passengers eventually arrived back at Gatwick on Tuesday.

 

There is no suggestion that Phuket Air, which has an unblemished safety record, operated the flights without adhering to all safety standards.

 

But in aviation, image is everything and Phuket Air is facing an uphill public relations battle. Internet websites which review the performance of airlines were dotted with less than complimentary thoughts on the company's most recent efforts.

 

One customer involved with Sunday's incident, Adam Benjamin, wrote: "I have just arrived back after the journey from hell - stranded in Sharjah and an almost total lack of communication from Phuket Air."

 

While the review sites were equally populated with positive accounts of other Phuket Air flights, complaints were also legion about long delays, indifferent service and old aircraft with non-functioning seats, lavatories and television screens. One passenger, who travelled in February this year, wrote: "Two of three seats were broken and could not recline. Overall impression of interior was very unpleasant and dim - hardly any light at all due to the very old aircraft used and no updating of interior. Food was of low quality and beer I asked for was warm. I have to return to Thailand and would not fly Phuket Airlines if I was given free tickets."

 

It was all supposed to be so different for this young challenger to the predominance of its flag-carrying competitors on the London-Bangkok route - British Airways, Thai Airways and Qantas.

 

Experts point out that by offering a cut-price fare of around £300, compared to the £500 charged by its competitors, Phuket Air is trying to break up a cosy club of higher-cost established carriers on the route.

 

Using older secondhand 747s, in Phuket Air's case bought from the Dutch carrier KLM, the airline is hoping to replicate the phenomenal success of short-haul budget carriers such as Ryanair or easyJet on an inter-continental scale by undercutting the operating costs of its rivals while attempting to offer a comparable service.

 

Philip Butterworth-Hayes, civil aviation editor of the Jane's publishing group, said: "The big question that many in the industry have been asking is whether the extraordinary success of the domestic low-cost airlines can be translated to the long-haul market. Phuket Air are almost the only ones to have tried it and they face a number of problems.

 

"While people are prepared to put up with a degree of discomfort on a flight that lasts no more than two and a half hours, they are not prepared to accept it for a 15-hour flight. Phuket Air are also trying to break into a sector that is ruled by bilateral agreements between governments and national flag carriers at a time when oil prices are very high. While a big carrier can hedge that cost over a number of years, a new entry has to buy fuel on the spot and that adds to their costs."

 

No one from Phuket Air was prepared to discuss the airline's current difficulties beyond a statement on its website from its executive vice-president, Chawanit Chiamcharoenvut, denying that there had been "flame and sparking" as claimed in some news reports about the incident on Sunday night. He said: "I reiterate that we always consider our passengers' safety the first priority."

 

But two weeks ago, the company appeared to accept that its international expansion was facing problems when it announced that it was suspending the troubled London to Bangkok route from later this month. A spokeswoman told the trade magazine Air Transport Intelligence that its Boeing 747-200 (known to be at least 25 years old) was due for maintenance: "We are suspending the service due to some complaints about the aircraft." The airline said it hoped to reintroduce the route in October using a newer 747-400 and in the meantime would be operating between Amsterdam and Bangkok.

 

All of which is a blow to the ambitions of the man behind Phuket Air, Vikrom Aisiri, a publicity-shy Thai millionaire who made his fortune from ventures including logging, gem mining and prawn fishing in Burma.

 

He established the airline in 2001 after the Thai authorities opened the domestic air market to competition, operating between Bangkok and coastal resorts with 13 aircraft and 600 employees. Mr Aisiri, who also owns an exclusive leisure resort called the Andaman Club in Burmese waters off the Thai coast and has previously spoken of close links with the Burmese junta, said last year that the success of the London route would lead to new operations to Sydney, Moscow and Prague. Now, it seems, he may have to think again.

 

The airline, which last year claimed to have occupancy rates running at 80 to 90 per cent, has been at the forefront of efforts to reinvigorate the tourism trade to Thailand following the south Asian tsunami by offering promotional fares.

 

But in Britain, the authorities confirmed they were now actively seeking assurances from the Thai government that Phuket Air is fit to fly.

 

The Department for Transport yesterday ordered a compulsory inspection of the latest Phuket Air jumbo to land at Gatwick.

 

The examination found no faults with the jet but officials confirmed that the second 747, HS-VAN, would not be allowed to leave Britain until its collision avoidance system, which alerts pilots to any risk of a mid-air crash, and faulty engine had been repaired or replaced.

 

A DfT spokesman said: "These are serious defects which must be resolved. In the meantime we are in urgent talks with the Thai authorities about Phuket Air and seeking assurances that future flights will be operated in accordance with international safety standards."

 

But all is not doom and gloom for one of international aviation's youngest players. As one customer, Peter Birch, put it: "Aircraft are ex-KLM but everything was working, attendants first class and the food good. The old aircraft and fuel stop has to be set against the low cost. It's your decision."

 

Why the no-frills formula doesn't fly in the long-haul market

 

Motoring across the Mojave Desert of southern California can be unnerving. As you drive the southerly route from San Francisco to Las Vegas along Highway 58, a shimmering array of giant aircraft appears in the wilderness. But this is no mirage: Mojave is where the world's airlines park the planes that they can no longer afford to fly. And when the price of oil rises by a few dollars, more planes arrive to bake in the sun.

 

The supply of large aircraft such as the "classic" Boeing 747, the DC-10 and the Lockheed Tristar greatly exceeds the demand, which is why you can pick up a used jumbo jet in good condition, one very careful owner, for $5m (£2.7m) or less - compared with the list price of around $200m for a new one.

 

With the cost of owning an aircraft seating 450 people so low, plenty of entrepreneurs have concluded that a fortune is waiting to be made by packing in the punters and undercutting the big airlines on long-haul routes.

 

Phuket Air is a good example. Its Boeing 747s work hard, shuttling from Bangkok to Gatwick and Amsterdam and back on alternate days. Unlike the modern jumbos used by its rivals, Phuket Air's Boeings lack the range to fly non-stop from Bangkok to London; the aircraft on which the passengers mutinied last weekend was on a scheduled refuelling stop in Sharjah. But a combination of a cheap aircraft and cheap labour should, so the theory goes, allow the airline to undercut the prevailing fare on British Airways, of £500 return or more, and fill its aircraft profitably.

 

The hypothesis is simple, but aviation history is littered with airlines that went bust applying no-frills principles to long-haul: PeopleXpress of the US, Wardair of Canada and - at the end of last year - Civair, whose secondhand 747 never got off the ground from South Africa to Stansted.

 

The highest-profile casualty was Laker Airways, which collapsed in 1982. Sir Freddie Laker's Skytrain across the Atlantic was put out of business by rivals offering equally low fares which they could subsidise from more lucrative routes.

 

Stelios Haji-Ioannou, who founded easyJet a decade ago, believes that his short-haul model does not adapt to longer flights: "The controllable costs where you can make a difference are swamped by uncontrollable costs like fuel and air-traffic control charges," he said.

 

The other uncontrollable variable is passenger confidence. Some travellers are concerned about the safety of older aircraft. But the rigorous safety regime applied to maintenance should mean that a 25-year-old jet is no riskier than a brand-new plane. Civil Aviation Authority inspectors routinely examine foreign aircraft using UK airports; when the Phuket Air jet landed at Gatwick on Monday, it was checked and pronounced to be in good condition, said the airline. However, a subsequent inspection after the aborted departure on Wednesday found "serious defects".

 

Phuket Air has had no fatal accidents - a safety record matched by many other carriers. They include the one outstanding success story of a new long-haul airline started with a single secondhand 747: Virgin Atlantic. But Sir Richard Branson's older jets are now resting in the desert; he is the only UK customer for the new Airbus A380. Once the first few of these "superjumbo" aircraft reach the second-hand market, a successful low-cost, long-haul operator may finally emerge.

[Flashermac]

And from The Nation

 

31 Aug 2005

 

Phuket Air lays off 300 after huge losses

Published on August 31, 2005

 

With revenue losses estimated at Bt500 million, Phuket Airlines has laid off about 300 employees since April.A sharp rise in fuel costs and bad timing in the expansion of flights to foreign destinations like London and Amsterdam have been blamed as the main factors behind the carrier?s financial woes.

 

Chawanit Chiamcharoenvut, executive vice president of the airline, said the steep rise in fuel prices had increased operating costs 30-40 per cent, while the airline had to pay fixed costs on aircraft leases, office rents and staff salaries.

 

Last year, Phuket Air posted a loss of Bt300 million.

 

The drastic staff cutbacks have reduced its workforce by a third, to 600 employees.

 

The airline has also introduced further cost-saving measures, such as closing its offices in Phuket, Hat Yai and Krabi and reducing the space it rents at Don Muang International Airport. The airline will instead beef up its direct-sales operations, including Internet-based bookings.

 

Yesterday, Chawanit sought help from Thailand?s Department of Civil Aviation (DCA) after France?s Civil Aviation Authority barred Phuket Air and five other international carriers from entering French airspace, because of increased safety concerns in the wake of several plane crashes worldwide in the past month.

 

Chawanit said Phuket Air had been certified as safe by the DCA and that it had been operating without any technical problems on its aircraft since April, after the carrier solved disagreements with British and Dutch aviation authorities.

 

One airline source said Phuket Air had obtained rights to fly into France but that the safety concerns raised by the French authorities were hampering the Thai carrier from doing so. Phuket Air?s plans to extend its routes to Moscow this year and Sydney early next year might also have to be postponed, because of the financial difficulties.

 

To lessen the financial backlash from sky-high oil prices, the airline recently increased its fuel-surcharge rate to customers by Bt610 per round trip on domestic and Bt1,040 on international routes. ?This saves the airline Bt20 million a month in operating costs,? explained Chawanit.

 

The airline currently operates three domestic routes ? between Bangkok and Buri Ram, Mae Sot and Ranong ? and one regional route between Bangkok and Rangoon.

 

Chawanit said the airline was planning to boost operations during the current high season by increasing its flights to Mae Sot and Ranong from the current five per week to seven. It will also add two more flights to its current seven per week to Buri Ram.

 

Phuket Air is considering adding a flight between Chiang Mai and Udon Thani three times a week in October, while doubling the weekly flights between Bangkok and Rangoon to four a week.

[samak]

rickfarang said:One of the airline's Boeing 747-300s has been impounded at South Korea's Incheon International Airport since Aug 10 over disputes involving the local GSA, the TV Club Travel.

the 747 of Phuket Air is still there; just saw it this morning; hopeless!

[dean]

I think that I stayed in August at the timeshare in Patong owed by the owner of Phuket Air. He doesn't run his timeshare any better.