THAI cancels Southern contract

THAI Airways has cancelled the use of one of its two freighters operated by Southern Air.

THAI had a block space purchase (BSP) contract for two years – ending March 2012 – for the two 777-200 LR freighters. Pichai Chunganuwad, managing director of THAI’s cargo and commercial mail department, confirmed the move and that THAI will now have to pay Southern a US$8.8 million penalty fee.

Chunganuwad blamed a global cargo slowdown and increased competition to and from Thailand.

“The problem is not finding enough loads to carry, but the yields are too poor to sustain a good business,” he said. “Worse still, operators cannot raise charges to offset the rising costs, particularly fuel.”

THAI’s board agreed in March to spend $56 million converting two of its 747-400 passenger aircraft into freighters to support the 60,000 tonnes of cargo it now carries every month.

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