Competition in New Zealand’s international market is intensifying: Thai Airways goes daily with its new 787-9

Thai Airways is improving its product in the New Zealand market by upgrading the Auckland-Bangkok route to daily and deploying brand new 787-9s.

Thai Airways currently operates five weekly flights to Auckland using 777-300ERs. For the last several years, Thai Airways has served the Auckland-Bangkok route with four to five weekly flights.

However, Thai Airways is introducing a new daily schedule to Auckland in mid Nov-2018. At the same time, Thai Airways will begin deploying to Auckland its newest aircraft type, the 787-9.

Auckland will be Thai’s first long haul destination for its new 787-9 fleet. The airline is taking delivery of its first 787-9 in Sep-2017 and plans to take a second 787-9 in 4Q2017.

Thai will initially use its first 787-9 on domestic and regional international flights, starting with a Bangkok-Chiang Mai service on 23-Sep-2017, before using the aircraft on Bangkok-Auckland from 16-Nov-2017 (and on Auckland-Bangkok from 17-Nov-2017). Airlines typically operate a new long-haul aircraft on short-haul routes for a few weeks for operational and training purposes.

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The 787-9 enables Thai Airways to increase frequency and provide a daily service to Auckland without increasing premium capacity. The daily product is particularly important for business traffic, enabling Thai to better compete for premium passengers in the Auckland-Southeast Asia, Auckland-South Asia and Auckland-Europe markets. Thai is the only airline operating nonstop flights from New Zealand to Thailand but relies heavily on sixth freedom traffic beyond Bangkok, particularly to fill up the business cabin as the local New Zealand-Thailand market consists mainly of leisure passengers.

Rival Malaysia Airlines and Singapore Airlines both already serve Auckland with one daily flight and compete with Thai Airways in several one-stop markets. Emirates and Qatar Airways also now operate one daily nonstop flights from Auckland to their Dubai and Doha hubs, offering New Zealand passengers a one-stop product to destinations throughout Europe. Thai Airways has 12 European destinations; Emirates and Qatar have significantly bigger European networks but Thai has the advantage of also offering Auckland passengers connections to South Asia and Indochina.

Thai has opted for a two class 298-seats configuration for its new 787-9 fleet, including 268 economy seats and 30 lie flat business class seats. The 777-300ER Thai now uses in the Auckland market has 348 seats, including 306 economy seats and 42 lie flat business class seats.

Thai will maintain the same premium product standard in the Auckland market as both the 777-300ER and 787-9 offer all aisle access in the business class cabin with a 1-2-1 configuration (some of Thai’s other long-haul aircraft have a less desirable 2-2-2 configuration in business class including its 787-8s and 777-200ERs).

Thai’s business class capacity in the Auckland will be flat at 210 weekly one-way seats as it transitions from five weekly 777-300ER frequencies to a daily 787-9 service. However, Thai’s ability to sell these seats should improve given the increased attractiveness of a daily service.

Economy class capacity will increase by 23% from 1,530 to 1876 weekly one-way seats. Thai could struggle somewhat to fill the additional economy seats given the intensifying competition in New Zealand’s international market. However, the new daily schedule should enable Thai to attract more passengers. The 23% increase in economy capacity is also much more absorbable than if Thai had upgraded Auckland to daily using the 777-300ER – which would have resulted in a 40% increase in economy class capacity (as well as a 40% increase in premium capacity).

Thai has had a competitive disadvantage in the Auckland market for several years because most of its competitors for New Zealand-Asia and New Zealand-Europe traffic have been offering a daily service. With the 787-9, Thai is finally able to close this gap and also offer New Zealand passengers an opportunity to fly in its newest aircraft.