Not sure how accurate the reporting is, but the following appeared in todays Bangkok Post
Thai Airways International (THAI) is seeking to skimp on fuel reserves on its aircraft as part of its intensified effort to reduce costs in light of high oil prices. The national carrier wants to halve contingency fuel reserves, legally now at 5% of total fuel load on each flight, in order to reduce weight on aircraft to cut fuel burn and emissions.
The cut, which was proposed to the Department of Civil Aviation (DCA), is part of more stringent fuel management being adopted at THAI. The company is toughening its cost reduction programme as it reported its worst quarterly loss since the 1997 Asian financial crisis in the second quarter of this year.
THAI executives allayed safety concerns about the proposed reduction in fuel reserves, as it is in line with practices in the European Union.
DCA deputy director general Wuthichai Singhamanee agreed, saying THAI's request was not unreasonable and therefore is permissible. ''This is fuel that is not used and there is nothing to be worried about,'' he said.
This portion is in addition to the volume needed to cover the distance on a specific flight, enabling an aircraft to fly to an alternate airport in case the airport where the aircraft is supposed to land cannot be served. The reserve is also in addition to fuel allotted to allow a plane to fly in a holding pattern for 30 minutes when landing is not possible.
Using a flight from Bangkok to London as an example, a THAI executive pointed out that halving the contingency reserve would shed about two tonnes from the 120 tonnes of jet fuel (about 960 barrels) a Boeing 747-400 normally carries.
By doing so, the airline could reduce fuel burned on that flight by about 800 kilogrammes, translating into financial savings of US$800 a flight.
With fuel prices now their biggest cost, airlines including THAI are aggressively enforcing new policies designed to reduce consumption.
Roughly 40% of THAI's total operating costs are for fuel, up from 37% last year.
THAI's fuel bill last year was about 70 billion baht with consumption of three million tonnes. As oil prices started spiking in April this year, its 2008 fuel cost is estimated at nearly 100 billion baht.
The savings arising from reducing fuel reserves could be substantial given the size of THAI's operation and network _ 82 aircraft, 18 million passengers a year and 60 destinations.
Achieving cost savings is critical for THAI, not for profitability but to stop losses from growing.
The carrier recorded a $308-million second-quarter loss, slightly worse than market expectations, on soaring fuel costs and a significant $150-million exchange loss related to its US dollar and euro borrowings, compared to a $43-million gain in the second quarter of 2007.The airline is slowing its planes by nearly 10 minutes, carrying less water, fewer newspapers and blankets, and limiting crew luggage allowances to cut fuel use and reduce weight.
THAI shares closed yesterday on the SET at 15.80 baht, down 30 satang, in trade worth 15.9 million baht.
Bangkok Post | Business news | THAI to cut flight fuel excess