Price-cutting not on agenda as THAI seeks turnaround in fortunes

[rooster59]

Price-cutting not on agenda as THAI seeks turnaround in fortunes

By THE NATION

 

 

National flagship carrier Thai Airways International (THAI) will avoid a heavy price-cutting strategy to be competitive next year but will instead focus on building a solid customer base and tap specific segments, airline president Sumeth Damrongchaitham said.

 

 

The carrier will continue to recruit stronger marketing partners, he added.

 

He estimated that the aviation industry would continue to experience intense competition next year.

 

THAI will continue with its transformation plan next year, which includes focusing on earning ancillary revenue, creating satisfactory customer experiences and effective human resource management.

 

THAI will cooperate with the Tourism Authority of Thailand to hold a joint marketing campaign in order to boost in-bound tourism and increase national revenue.

 

Sumeth said that currently several negative factors were impacting the aviation industry and affecting business operations, which had caused several airlines to cease operations. Airlines are incurring losses as a result of the world economic situation, the aggressive and intense competition, technological disruption and political unrest across the globe. THAI was also affected by the continually strengthening baht, he said.

 

THAI and its subsidiaries reported a total revenue of Bt45.016 billion for the third quarter of 2019, down 6.1 per cent year on year. THAI and its subsidiaries reported a net loss of Bt4.680 billion for the third quarter.

 

THAI has continued to implement cost cutting measures, such as postponement of unnecessary investments, work reprocessing to reduce expenditure and improve work quality, as well as reduction in employee benefits of management and staff.

 

THAI has implemented a personalised approach to target customer groups with emphasis on creating ancillary revenue. During the first nine months of 2019 (January to September), THAI earned Bt4.604.17 billion in ancillary revenue.

 

Source: https://www.nationthailand.com/business/30378402

 

-- © Copyright The Nation Thailand 2019-11-17

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[Creasy]

Thai Airways books will be just like the great Split Enz song,

’I See Red’ I see red. I see red.

for the foreseeable future.

 

They want to be competitive, but won’t cut their fares to compete ????

[steven100]

26 minutes ago, rooster59 said:

cost cutting measures, such as postponement of unnecessary investments, work reprocessing to reduce expenditure and improve work quality, as well as reduction in employee benefits of management and staff.

All useless measures, not one of those mentioned will have any mediocre impact.  

how about admitting the company is a complete failure. 

[spidermike007]

When one is trying to turn around a business, it is always advisable to NOT be competitive on pricing, and to ignore the signs of a flagging economy. It is also very important to avoid saying NO, to thousands of overly entitled generals, ministers and others, who are accustomed to flying anywhere in the world on a whim, first or business class. 

[RichardColeman]

4 hours ago, Creasy said:

Thai Airways books will be just like the great Split Enz song,

’I See Red’ I see red. I see red.

I think '6 months in a leaky boat' more apt

[fforest1]

And whats the FIRST thing 85-90% of people take into consideration when looking for  a flight?....Thats right the PRICE.....

 

If price was not important every one would be flying 1st class.....

 

Thai airlines consistently cost 100s of dollars more than other airlines....In fact I have never flown with them once over many many trips to Thailand.... 

 

 

[legend49]

THAI will cooperate with the Tourism Authority of Thailand to hold a joint marketing campaign in order to boost in-bound tourism and increase national revenue.

 

So they have failed before the start by partnering the group who cant count tourists into the country!

[RotBenz8888]

4 hours ago, rooster59 said:

 

 

4 hours ago, rooster59 said:

creating satisfactory customer experiences and

That'll be one little challenge..

[lapamita]

4 hours ago, Creasy said:

 

 

They want to be competitive, but won’t cut their fares to compete ????

for an flagship carrier the wrong way, and would result in deeper looses. 

TG is competetive already in pricing. many say overpayed executives hmm... salarys are not that high MOBs  getting btw 400-1,4 mb THb... a fraction like in the west

Problems  are deeper....

1. to many groundstaff

2. maybe bad hedging of oil ( if cut increasd costs out , the balance would be already  near break even)

3. load factor is good, but RPK to low, increase in fares, is not a big option at the moment

4. Domestic routes are a major problem 

 

Resolution

Cutting ground staff,better hedging of oil, upgrade in service quality on international routes , reducing services on dometsic routes ( pricing change like..full eco tickets,eco tickets at lower pricing excl services,( LH done it succesfully) standby promos,cutting low cabin load flights on domestic routes,extension on copperation with other airlines to cut costs,Review the option of outsourcing dif. segments

 

..lower pricing and cut in salarys , is not the option ,and contraproductive.

 

[new2here]

I don’t think we will see do a flat out NO discount strategy.. (the leading paragraph refers to “heavy” discounting) I think any heavy discounting is a poor path for Thai to take long term.

 

i think Thai needs to be more “competitive” in terms of what they fly (fleet and cabin), where and when they fly (partially a network issue but also fleet size and exact cabin config) and how they fly it (staffing onboard, hard/soft product etc)

 

Therefore I agree with Thai that massive or rampant discounting isn’t the best long term strategy— it’s more “rightsizing” what they currently have and making modifications to the parts that just don’t fit, are financially unjustifiable or don’t fit their current and expected plans.

 

its true that they’ll have to make some staffing cost cuts at the managing director level and higher - and these will most likely be unpopular and probably also politically unpopular- but that’s going to be a part of it... work rule realignment I suspect will also be a part... a reworking of the revenue management picture as well.

 

I’ve said before I think Thai has a near zero chance to survive and prosper long term from only savings alone... they’ll have to also address the revenue side.   To me Thai trying to chase lower fare (lower margin) but perhaps higher volume passengers doesn’t seem like the most viable plan given their inherent and existing legacy cost structure and the plethora of existing competitors who ARE set up from the beginning with LCC cost structures.  
 

they need to position themselves as the best “value” carrier.. that to me is a good strength play for Thai given all that they are, where they are, connectivity they have (via BKK) and all the other parts of the whole.

[Khunbilly]

Just bought tickets the other day and Thai is still 50% more than everyone else one comparative flights. So, I went with ANA instead. If the marketers that Thai hires don’t tell them to cut rates to build that stronger customer base then they should be sacked. The marketers and the Thai management that hired them. 

[ChakaKhan]

58 minutes ago, RichardColeman said:

I think '6 months in a leaky boat' more apt

"I got you(baht), And thats all I want"....

[lapamita]

5 minutes ago, Khunbilly said:

Just bought tickets the other day and Thai is still 50% more than everyone else one comparative flights.. 

that depend on load and promos. i dont think y bought an full price eco ticket ( in this case fares are comparable). depending on promos and reduced fares, one time this airline cheaper and another day thai.

You cant say Thai is always more expensive espec on longhaul flights. 

 

 

[FinChin67]

Why not get rid of the freeloaders (relatives, generals etc...) as many have said and sometimes give us who fly business class upgrades to first or other perks? No, nothing. Collecting Thai miles and using those are a joke. I could continue this rant but it's useless.

 

Stopped using them about 2 years ago and started to use Cathay or even Chinese airlines when flying from China / Hong Kong. Why pay for them top dollar if you get nothing in return? For short trips Air Asia is good value for money and specially now when flying out of KL. Pay a little extra for better seat and that's it. 

 

[holy cow cm]

Just bought domestic economy tickets the other day for later next week travel leading into the return the following week. CM - BKK - CM all on normal week days not on a Friday or Monday and the cost was 6300 baht. Now tell me that is cheap.
 

[SmartyMarty]

13 minutes ago, lapamita said:

that depend on load and promos. i dont think y bought an full price eco ticket ( in this case fares are comparable). depending on promos and reduced fares, one time this airline cheaper and another day thai.

You cant say Thai is always more expensive espec on longhaul flights. 

 

 

Actually I can say Thai are more expensive on long haul flights because I have actual experience of this booking flights several times a year. One cannot argue with facts. Thai are over-priced. However, in other areas such as comfort and food they are as good as anyone else in my opinion.

[lapamita]

2 minutes ago, holy cow cm said:

Just bought domestic economy tickets the other day for later next week travel leading into the return the following week. CM - BKK - CM all not on a Friday or Monday and the cost was 6300 baht. Now tell me that is cheap.
 

i dont belive so....  why you buy ??? at this price would never buy,and there many other choices  much lower price...

this maybe the full rate ,and this would only implied if LF alreay nearly full

 

you know in yourr homecountry ,how expensive is a full fare ticket for local destination from a flag carrier?

 

when i fly cm and return on thai or thaismile never pay more than 3000 (peak days excl)

 

[lapamita]

16 minutes ago, SmartyMarty said:

 Thai are over-priced.

hmm

flights from europe , this year some friends booked, only 550e directflight , hmm cheap , even for nov/dec

 

on the other hand i bought a TK flight for only 578 USD in a promo time for february... at the moment same ticket around 1000 usd and full fare over 2000

 

so is TK  expensive or cheap.. no answer, depend on time and booking , and this is the same for TG

 

..by the way not any airline in this segment can survive with " i am always the cheapest", and earnings cant be made on cheaaap  promo tickets, the airline relly on other products

[DLock]

It really doesn't matter what Thai Airways do, or how profitable, or not, they are.

 

They will always have a soft landing with the Thai Government Tax Payers bailing them out.

 

Thailand can never bear the loss of face of closing the national carrier. So they will just keep rotating the next Incompetent and inexperienced Buffoon to "manage" the airline until the next loss and cash call.

[lapamita]

2 minutes ago, DLock said:

It really doesn't matter what Thai Airways do, or how profitable, or not, they are.

 

They will always have a soft landing with the Thai Government Tax Payers bailing them out.

 

Thailand can never bear the loss of face of closing the national carrier. So they will just keep rotating the next Incompetent and inexperienced Buffoon to "manage" the airline until the next loss and cash call.

I would not close too, and there is no reason to close operations for TG

and further capital, if needed could still be done via capital increase

so for what

[ThomasThBKK]

15 minutes ago, lapamita said:

 

..by the way not any airline in this segment can survive with " i am always the cheapest", and earnings cant be made on cheaaap  promo tickets, the airline relly on other products

 

They usually make their money on business class and use that to subsidize economy. However if you give business class tickets out for free to hisos and people working there there's not much to be earned....

[lapamita]

Just now, lapamita said:

I would not close too, and there is no reason to close operations for TG

and further capital, if needed could still be done via capital increase on the SEt and even in bonds

so for what

 

[holy cow cm]

17 minutes ago, lapamita said:

i dont belive so....  why you buy ??? at this price would never buy,and there many other choices  much lower price...

this maybe the full rate ,and this would only implied if LF alreay nearly full

 

you know in yourr homecountry ,how expensive is a full fare ticket for local destination from a flag carrier?

 

when i fly cm and return on thai or thaismile never pay more than 3000 (peak days excl)

 

I fly Thai no matter what for domestic unless full then I fly Bangkok air. I do not fly Thai Smile as do not like it other than the girls are hot. The next would be Vietjet because they fly to Suvarnabhumi airport my given choice. I fly for comnfort and mileage and use it for upgrades. 

[lapamita]

4 minutes ago, ThomasThBKK said:

 

They usually make their money on business class and use that to subsidize economy. However if you give business class tickets out for free to hisos and people working there there's not much to be earned....

you right, but that is common practice at other airlines too ( at LH even my mother getting upgrades on one leg always FFM-BKK , even shes not working for LH)

... their is a guideline ( changed 2008) , for free and standby tickets for employees and related  at TG ..... maybe a little more strict would be  ok, but would not solve the main problems

[Sir Swagman]

54 minutes ago, lapamita said:

for an flagship carrier the wrong way, and would result in deeper looses. 

TG is competetive already in pricing. many say overpayed executives hmm... salarys are not that high MOBs  getting btw 400-1,4 mb THb... a fraction like in the west

Problems  are deeper....

1. to many groundstaff

2. maybe bad hedging of oil ( if cut increasd costs out , the balance would be already  near break even)

3. load factor is good, but RPK to low, increase in fares, is not a big option at the moment

4. Domestic routes are a major problem 

 

Resolution

Cutting ground staff,better hedging of oil, upgrade in service quality on international routes , reducing services on dometsic routes ( pricing change like..full eco tickets,eco tickets at lower pricing excl services,( LH done it succesfully) standby promos,cutting low cabin load flights on domestic routes,extension on copperation with other airlines to cut costs,Review the option of outsourcing dif. segments

 

..lower pricing and cut in salarys , is not the option ,and contraproductive.

 

Maybe you should take up a more potentially relevant activity......when was the last time you saw any Thai enterprise take advice from farangs? I suggest croquet perhaps as a way to improve business practices with TG.

[DLock]

6 minutes ago, lapamita said:

I would not close too, and there is no reason to close operations for TG

and further capital, if needed could still be done via capital increase

so for what

 

Thai Airways is a Government funded airline. They do not raise funds externally at present. Any losses because of inefficiency, too expensive, poor service and "flights for the lads" come out of tax payers...

 

How do you define "no reason"? Would a massive losses, hugely unprofitable not be reasons to consider closing a non performing business?

[lapamita]

12 minutes ago, Sir Swagman said:

....when was the last time you saw any Thai enterprise take advice from farangs? 

..if you talk about small enterprises never or nearly never " thais are the "perfection of the evolution"

..if it comes ot big  international thai companys, it looks diffrent

but not all farang advice would be the top of all , we have failed companys too in the airline sector Panam,named as the biggest, Swiss, Air berlin. and so on...., and Thai is still far away for filling bancrupty

[lapamita]

4 minutes ago, DLock said:

 

Thai Airways is a Government funded airline. 

 

How do you define "no reason"? Would a massive losses, hugely unprofitable not be reasons to consider closing a non performing business?

1. its a PCL , a  listed company, with the possibility to raise private funds ( yes 51% hold by MOF ), via Bonds and share issue ..so why you say the taxpayer only pay?

2. a temproary  non performing buissenes is not a reason to shut down ( than we have to shut down the half of all companys , thousands of zombi companys esp. in the US)

[DLock]

1 minute ago, lapamita said:

1. a prublic  listed company, with the possibility to raise private funds ( yes 51% hold by MOF )

2. a temproary  non performing buissenes is not a reason to shut down ( than we have to shut down the half of all companys , thousands of zombi companys esp. in the US)

Exactly, it's 51% owned by the Thai Ministry of Finance...in other words, majority owned.

 

Temporary non performing business? 

 

Here kid, read this, then come back with some more logically, well thought out, arguments, because right now, you are making little sense to debate you.

 

http://bakertilly.co.th/insights/thai-airways-drastic-action-required/

[lapamita]

1 minute ago, DLock said:

 

 

Here kid, read this,

..discussion go to low level

 

take care

 

bye