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Monday, 1 December 2008
Political Crisis Ripples Across Thai Economy
As the closure of the Bangkok airports drags on, the cost of the disruption - in frayed nerves, cash, delayed goods and to Thailand’s image as a holiday paradise - is mounting.
As the closure of the Bangkok airports drags on, the cost of the disruption - in frayed nerves, cash, delayed goods and to Thailand’s image as a holiday paradise - is mounting.
Bangkok is not just a travel destination on its own, it also serves as a major regional hub - along with Singapore, Kuala Lumpur and Hong Kong - for both passenger and cargo travel. The current crisis has caused logistics companies and airlines to divert much of their business to competing hubs.
Suvarnabhumi Airport, which has been shut since last Tuesday by demonstrators campaigning for the resignation of Prime Minister Somchai Wongsawat, serves about 100 airlines with flights to 68 countries. It handles more than one quarter of a million commercial flights a year; 100,000 passengers a day; and 1,209,720 tons of freight, or about 3 percent of the world’s total.
It is no wonder, then, that ripples have been felt well beyond Thai resorts and hotels, where about 300,000 travellers have been stranded as a result of the closing of Suvarnabhumi and of Don Muang, the other airport serving the Thai capital.
Hundreds of flights have been cancelled. Thai Airways, which usually accounts for more than a quarter of the flights in and out of Suvarnabhumi, put the daily cost of the standstill at more than 500 million baht, or $14 million.
AirAsia, a regional low-cost airline that represents about 12 percent of traffic at the airport, has been forced to cancel about 106 flights a day, affecting about 10,000 passengers daily.
The pain extends to other countries’ airlines, with Lufthansa of Germany, for instance, usually operating 21 flights a week between Germany and Bangkok, in addition to 5 flights per week for freight.
The fallout for the broader Thai economy - notably the crucial tourism industry - is hard to calculate. But Standard & Poor’s, the rating agency, on Monday lowered its economic outlook for Thailand because of the current turmoil.
“It has caused serious disruptions to economic activities in the Kingdom and raises the possibility of widespread violence markedly,” said Kim Eng Tan, credit analyst at Standard & Poor’s. “These developments will add to the negative pressures of a global slowdown on Thailand’s economy.”
Airlines have scrambled to find alternatives for their frustrated passengers, with U-Tapao military airfield, two hours from Bangkok, gradually increasing flights to evacuate stranded passengers. Cathay Pacific said it was running special flights to U-Tapao on Tuesday.
But that airport, which was not designed to take on the number of flights needed to handle a mounting backlog of passengers, is very congested and lacks facilities like passenger check-in and baggage handling.
It is also becoming increasingly clear that even when Suvarnabhumi reopens, the backlog of passengers, security and computer checks means that it will take several days for things to return to normal. Serirat Prasutanond, general manager of the airport, told Reuters on Monday that “normally, checking the IT systems takes one week,” and that the delay would be even longer if any of the airport’s systems needed repair.
Air cargo operations also have been completely shut down, representing about 3 billion baht in goods and air freight revenue each day, according to Kasem Jaliyawaewong, president of the Thai Air Freight Forwarders Association.
Cargo and logistics companies have scrambled to reroute as much of their business as possible. Some incoming air cargo has been diverted to U-Tapao, while certain vegetables and flowers shipments are being sent from Phuket airport. But this amounts to only about 10 percent of the usual inbound shipments and 10 percent to 20 percent of outbound air freight, Kasem said.
DHL is among many companies that are diverting deliveries destined for places other than Thailand to other regional hubs like Singapore and Hong Kong. “We hope this situation gets resolved soon, that’s for sure,” said Stephen Fenwick, senior vice president at DHL Express Asia-Pacific.
DHL is also using a regional Thai airport and roads for its deliveries inside Thailand. And while extra road traffic has led to long lines of trucks at borders, he said, DHL has actually gained between 15 percent and 20 percent of business in the region because it is one of few operators able to offer both road and air transport.
Lufthansa Cargo, the freight division of Lufthansa, also has rerouted business via Singapore and Kuala Lumpur. As the global economic downturn reduced demand for transportation services in recent weeks, the carrier had spare capacity within its existing flights.
Capacity at the Kuala Lumpur and Singapore airports also are good, despite added traffic from carriers, said Nils Haupt, a spokesman in Frankfurt for Lufthansa Cargo. The main problem, he said, was perishable goods for which delays of several days can render shipments worthless.
Meanwhile, despite the frustration and the delays, some travellers have learned to take the situation their stride. “Most tourists who I speak to are very happy about the situation,” said Appn Schlumberger, who went to Thailand for a vacation and had been due to travel home to Paris on Nov. 29.
Most Thais, she said, are ashamed about the effects of disruption on foreigners. “They try to help as best as they can. Even my hotel in Bangkok did not make me pay my dinner.”
1 comment:
Political Crisis Ripples Across Thai Economy
By Bettina Wassener
1 December 2008
As the closure of the Bangkok airports drags on, the cost of the disruption - in frayed nerves, cash, delayed goods and to Thailand’s image as a holiday paradise - is mounting.
Bangkok is not just a travel destination on its own, it also serves as a major regional hub - along with Singapore, Kuala Lumpur and Hong Kong - for both passenger and cargo travel. The current crisis has caused logistics companies and airlines to divert much of their business to competing hubs.
Suvarnabhumi Airport, which has been shut since last Tuesday by demonstrators campaigning for the resignation of Prime Minister Somchai Wongsawat, serves about 100 airlines with flights to 68 countries. It handles more than one quarter of a million commercial flights a year; 100,000 passengers a day; and 1,209,720 tons of freight, or about 3 percent of the world’s total.
It is no wonder, then, that ripples have been felt well beyond Thai resorts and hotels, where about 300,000 travellers have been stranded as a result of the closing of Suvarnabhumi and of Don Muang, the other airport serving the Thai capital.
Hundreds of flights have been cancelled. Thai Airways, which usually accounts for more than a quarter of the flights in and out of Suvarnabhumi, put the daily cost of the standstill at more than 500 million baht, or $14 million.
AirAsia, a regional low-cost airline that represents about 12 percent of traffic at the airport, has been forced to cancel about 106 flights a day, affecting about 10,000 passengers daily.
The pain extends to other countries’ airlines, with Lufthansa of Germany, for instance, usually operating 21 flights a week between Germany and Bangkok, in addition to 5 flights per week for freight.
The fallout for the broader Thai economy - notably the crucial tourism industry - is hard to calculate. But Standard & Poor’s, the rating agency, on Monday lowered its economic outlook for Thailand because of the current turmoil.
“It has caused serious disruptions to economic activities in the Kingdom and raises the possibility of widespread violence markedly,” said Kim Eng Tan, credit analyst at Standard & Poor’s. “These developments will add to the negative pressures of a global slowdown on Thailand’s economy.”
Airlines have scrambled to find alternatives for their frustrated passengers, with U-Tapao military airfield, two hours from Bangkok, gradually increasing flights to evacuate stranded passengers. Cathay Pacific said it was running special flights to U-Tapao on Tuesday.
But that airport, which was not designed to take on the number of flights needed to handle a mounting backlog of passengers, is very congested and lacks facilities like passenger check-in and baggage handling.
It is also becoming increasingly clear that even when Suvarnabhumi reopens, the backlog of passengers, security and computer checks means that it will take several days for things to return to normal. Serirat Prasutanond, general manager of the airport, told Reuters on Monday that “normally, checking the IT systems takes one week,” and that the delay would be even longer if any of the airport’s systems needed repair.
Air cargo operations also have been completely shut down, representing about 3 billion baht in goods and air freight revenue each day, according to Kasem Jaliyawaewong, president of the Thai Air Freight Forwarders Association.
Cargo and logistics companies have scrambled to reroute as much of their business as possible. Some incoming air cargo has been diverted to U-Tapao, while certain vegetables and flowers shipments are being sent from Phuket airport. But this amounts to only about 10 percent of the usual inbound shipments and 10 percent to 20 percent of outbound air freight, Kasem said.
DHL is among many companies that are diverting deliveries destined for places other than Thailand to other regional hubs like Singapore and Hong Kong. “We hope this situation gets resolved soon, that’s for sure,” said Stephen Fenwick, senior vice president at DHL Express Asia-Pacific.
DHL is also using a regional Thai airport and roads for its deliveries inside Thailand. And while extra road traffic has led to long lines of trucks at borders, he said, DHL has actually gained between 15 percent and 20 percent of business in the region because it is one of few operators able to offer both road and air transport.
Lufthansa Cargo, the freight division of Lufthansa, also has rerouted business via Singapore and Kuala Lumpur. As the global economic downturn reduced demand for transportation services in recent weeks, the carrier had spare capacity within its existing flights.
Capacity at the Kuala Lumpur and Singapore airports also are good, despite added traffic from carriers, said Nils Haupt, a spokesman in Frankfurt for Lufthansa Cargo. The main problem, he said, was perishable goods for which delays of several days can render shipments worthless.
Meanwhile, despite the frustration and the delays, some travellers have learned to take the situation their stride. “Most tourists who I speak to are very happy about the situation,” said Appn Schlumberger, who went to Thailand for a vacation and had been due to travel home to Paris on Nov. 29.
Most Thais, she said, are ashamed about the effects of disruption on foreigners. “They try to help as best as they can. Even my hotel in Bangkok did not make me pay my dinner.”
Thomas Fuller contributed reporting from Bangkok.
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