Nok Air Cuts Local Routes, Management Salaries To Reduce Costs

[george]

Nok AIR cuts local routes, management salaries to reduce costs

Low-cost airline Nok Air has cut salaries and reduced domestic routes in order to save costs.

BANGKOK: -- CEO Patee Sarasin yesterday said the airline would cut management pay by 20 per cent. There are 30 to 40 people at management level who will be affected. The move is expected to save Bt4 million per month.

Meanwhile, the airline is considering increasing fares by up to Bt240.

"The airline has already lost Bt114 million, which is lower than was reported earlier," Patee said.

He also confirmed that the airline would not stop operations, as media speculation predicted. Moreover, the airline is still working with its parent company Thai Airways International, in services as well as marketing.

Nok Air's board agreed to the measures yesterday following discussions about the airline's future.

On Tuesday, the airline cut three domestic routes, from Bangkok to Chiang Rai, Ubon Ratchathani and Krabi.

Nok Air cancelled all flights between Bangkok and Bangalore last November and Bangkok and Hanoi in May. However, it is still operating Bangkok-Udon Thani, Bangkok-Trang, Bangkok-Nakhon Si Thammarat and Bangkok-Chiang Mai services.

Passengers on cancelled routes are being transferred to Thai Airways International and Thai AirAsia. Those preferring not to travel can reclaim their money from Nok Air.

The airline was established in December 2003 and started operations on July 23, 2004. Its shareholders are: Thai Airways (39 per cent), Dhipaya Insurance (10 per cent), the Government Pension Fund (10 per cent), Krung Thai Bank (10 per cent), the Crown Property Bureau (6 per cent), and ING Funds, King Power, Siam Commercial Bank Securities, Patee Sarasin and Supapong Asvinvichit - each holding 5 per cent.

Nok Air began its first daily international service to Bangalore on May 31, 2007. The airline also has landing rights for additional Indian cities: Chennai, Hyderabad and New Delhi.

Nok Air suspended its operations to Bangalore last November,reportedly due to non-availability of aircraft, and to allow services to more lucrative routes in Southeast Asia.

-- The Nation 2008-07-04

[wrecker]

These companies do not make any business sense at all. If you take a look at the shareholders it is prone to failure. It is almost shameless that pension funds invest their members money in this kind of mickey mouse companies. If Thai airways cannot do it themselves NOK cannot do it. The interference of politically influenced workers unions and their shareholders guarantee failure. it is a blessing for them that they can hide right now behind the fuel costs, at least they can keep face. In this kind of companies it is never a business decision always a political one. Maybe the pension funds and crown property can invest in a new satellite company, it is an expensive project without any merit for shareholders but it looks good on the big boys, it is kind of patriotic I suppose.

[DrDave]

The numbers in the first paragraph are either incorrect, or the 30-40 management level people are making an awful lot of money!

Achieving a monthly Bt 4 million savings via a 20% salary cut for a maximum of 40 employees implies an average monthly salary of Bt500,000, or an annual salary of Bt 6 million for the affected population. Seems awfully high.

[alstaxi]

The numbers in the first paragraph are either incorrect, or the 30-40 management level people are making an awful lot of money!

Achieving a monthly Bt 4 million savings via a 20% salary cut for a maximum of 40 employees implies an average monthly salary of Bt500,000, or an annual salary of Bt 6 million for the affected population. Seems awfully high.

I think that figure includes the cutting of not too profitable routes as well.

[WinnieTheKhwai]

Well it is an article in The Nation.. You can't expect them to get anything right. (To the point where it actually makes more sense do just ignore things with number in them, and distill it to toddler level, like "Nok Air aren't doing so well at the moment."

[waza]

Ok, good news. Looks like they wont fold before my booked and paid for flight

[Galong]

Well it is an article in The Nation.. You can't expect them to get anything right. (To the point where it actually makes more sense do just ignore things with number in them, and distill it to toddler level, like "Nok Air aren't doing so well at the moment."

:D :D :D

Thanks for my morning laugh, Winnie

[Gary A]

I certainly DON'T understand their business strategy. They started a Bangkok Loei route. That was a welcome thing. You had to make reservations quite early because the flight was always full. They then added a second flight and that helped a lot. Things seemed to be going along quite well and then they suddenly cut BOTH routes because they said they needed the planes for other routes. Why not just cut the added second flight and leave the original first flight alone?

[yumidesign]

Well it is an article in The Nation.. You can't expect them to get anything right. (To the point where it actually makes more sense do just ignore things with number in them, and distill it to toddler level, like "Nok Air aren't doing so well at the moment."

You are so right........include the Bangkok post in this assesment. In a conversation with a masters degree student a few nights ago, who was asking for help in translating a business letter, she could not tell me the difference between a 'buyer' or 'seller'. It is truely amazing that business operates at all

[zepplin]

I certainly DON'T understand their business strategy. They started a Bangkok Loei route. That was a welcome thing. You had to make reservations quite early because the flight was always full. They then added a second flight and that helped a lot. Things seemed to be going along quite well and then they suddenly cut BOTH routes because they said they needed the planes for other routes. Why not just cut the added second flight and leave the original first flight alone?

JUST ANOTHER EXAMPLE OF THE WEIRD AND WONDERFULL WAYS OF CONDUCTING BUISNESS HERE IN LOS(WHICH IS FALTERING AT THE MOMENT)

I THINK GIVE THAILAND ANOTHER YEAR OR TWO OF SUSTAINED HIGH PRICES ON EVERYTHING AND THE AMOUNT OF GEARED UP PEOPLE HERE (WITH THE BANKS)THAT WILL BE IN SERIOUS TROUBLE WILL BE HUGE-ITS NOT JUST THE BIG COMPANIES THAT MAKE BAD BUISNESS DECISIONS, HERE ON SAMUI THE AMOUNT OF PLACES THAT ARE EMPTY ARE STAGGERING,AND THEY WILL NOT LOWER THEIR MONTHLY RENT ,EVENTHOUGH THEY KNOW THE BANK WILL TAKE IT AWAY SOONER OR LATER.THERE IS NO SUCH THING AS SOUND FINANCIAL PLANNING IN THAILAND...

[h90]

The numbers in the first paragraph are either incorrect, or the 30-40 management level people are making an awful lot of money!

Achieving a monthly Bt 4 million savings via a 20% salary cut for a maximum of 40 employees implies an average monthly salary of Bt500,000, or an annual salary of Bt 6 million for the affected population. Seems awfully high.

500.000 per month is not much....you must consider that most probably the management are friends of influent people. I help you there, but my brother needs a job. "Job job, well Thai Airways is already full with my cronies, let make a new management position at NOK air"

[h90]

These companies do not make any business sense at all. If you take a look at the shareholders it is prone to failure. It is almost shameless that pension funds invest their members money in this kind of mickey mouse companies. If Thai airways cannot do it themselves NOK cannot do it. The interference of politically influenced workers unions and their shareholders guarantee failure. it is a blessing for them that they can hide right now behind the fuel costs, at least they can keep face. In this kind of companies it is never a business decision always a political one. Maybe the pension funds and crown property can invest in a new satellite company, it is an expensive project without any merit for shareholders but it looks good on the big boys, it is kind of patriotic I suppose.

Actually it should be almost impossible to loose with NOK air.

They can use all the Thai Air infrastructure, can have a very small efficient personal structure.

But of course that did not happen, most probably every group sent their cronies which have no idea about an airline.

[ding]

No care about Nok Air.

They are feces and should be flushed.

[mrgolf]

I'll tell you one airline I will never fly again. Thai Air Asia.

Offered an internet rate of $25.00 from BKK to Saigon and return. Too good to be true? Yes. With all there surcharges the ticket cost $200.00.

Charged me $164.00 overweight baggage fee from Saigon to BKK. I could have bought the luggage a seat at that price.

[paulandmaneerat]

Talking flights, I asked my agent to get me 2 tickets (for London) on the new Thai Airways 2 for 1 offer. I was quoted nearly 250,000 baht (business class) for the first ticket, the second being free. GF and others are around 100,000 baht for business class. Is a business class seat to London with Thai really 250k for a seat? Or do they think farangs can't do their sums?

[illy]

i think a few "western" airlines such as "the big kangaroo" could take advice from nok and cut its management fees as well. they are all the same cronies everywhere, its not just in Thailand.Qantas has been going down the tube for years with its appalling customer service, ageing planes , safety 'close calls' but the execs salaries just keep going up.

still, i will be looking out for a few Nok safety issues coming soon, as once an airline is in trouble, issues such as safety get the cut always!!!and their aircraft are almost as old as One 2 Go planes!!!

Edited July 5, 2008 by illy

[hansnl]

These companies do not make any business sense at all. If you take a look at the shareholders it is prone to failure. It is almost shameless that pension funds invest their members money in this kind of mickey mouse companies. If Thai airways cannot do it themselves NOK cannot do it. The interference of politically influenced workers unions and their shareholders guarantee failure. it is a blessing for them that they can hide right now behind the fuel costs, at least they can keep face. In this kind of companies it is never a business decision always a political one. Maybe the pension funds and crown property can invest in a new satellite company, it is an expensive project without any merit for shareholders but it looks good on the big boys, it is kind of patriotic I suppose.

Dear Mr Wrecker.

These companies make sense, if done right.

Shareholders don't maka a business, they invest some money and leave the running of the company to someone else.

Pension funds invest money in all kind of weird things for the highest result, they have to, because they must be able to pay the pensions.

If a mother company might not be able to do something for a profit, maybe a no frills offshoot might do better.

Interference of politically influenced unions, AND THEIR SHAREHOLDERS?

That is a new concept, unions with shareholders!

Maybe you mix up things a little bit, unions tend to have members.

So, they hide behind the fuels prices not to loose face?

What about all the airlines that reduce flights, staff, routes, investment, & all.

All over the world!

Politics the basis of all failing companies?

Unions the basis of all failing companies?

Really?

Come on!

It is always the management that is accountable for a failing company.

NO exception.

If the management cannot operate a company because of outside, or inside, influences, they should just quit!

Quite simple, if you cannot do a job, go away!

But, be assured, they will stay, because the bonus is glimmering in the distance.

And is sent away, there is always the obscene severance package.

High time for the airlines to reconsider jet driven planes, and rethink turboprop airplanes.

20% less expensive to run, and nowadays able to fly at 700-750 km/hour.

High time to change the way to run the business.

High time to start thinking ahead.

Nobody in the industry does or did, obviously, because the kerosene was cheap, and was expected to remain cheap, but any normal thinking human being could see that was not to be!

But, mostly because of the shorttime drive of most companies to earn as much money as possible, thinking ahead does not fit into the maximalisation of profit.

Sir, the obscene bonusses paid to the management, the shortsightedness of management and shareholders, the sheer stupidity of doing business in the same old way in a fast changing world, well sir, that is the reason of the downfall of most companies in tyhe flying business.

THE industry that is so heavily depending on oil, non taxed of course, should know better!

And sir, the shortsightedness mentioned above is exactly the reason unions try to save as much as possible for people who are working for a company, and who are in a certain way, also a kind of shareholder.

But nowadays people working for companies, are not people anymore, but like a commodity, "human"resources.

A besides, a company gets the workers and the unions they deserve.

[Governor]

Talking flights, I asked my agent to get me 2 tickets (for London) on the new Thai Airways 2 for 1 offer. I was quoted nearly 250,000 baht (business class) for the first ticket, the second being free. GF and others are around 100,000 baht for business class. Is a business class seat to London with Thai really 250k for a seat? Or do they think farangs can't do their sums?

I returned from London two weeks ago, having paid 63,000 for a GF business class seat.

[Marvo]

....you must consider that most probably the management are friends of influent people.

You mean effluent people...?

[fsuthai]

....you must consider that most probably the management are friends of influent people.

You mean effluent people...?

Don't mean to be a 'nitpicker' over semantics but I believe the most appropriate and proper form would be "<b>affluent</> people".

[tw25rw]

Don't mean to be a 'nitpicker' over semantics but I believe the most appropriate and proper form would be "<b>affluent</> people".

Bet you get loads of party invites...

[brianbiegler]

I'll tell you one airline I will never fly again. Thai Air Asia.

Offered an internet rate of $25.00 from BKK to Saigon and return. Too good to be true? Yes. With all there surcharges the ticket cost $200.00.

Charged me $164.00 overweight baggage fee from Saigon to BKK. I could have bought the luggage a seat at that price.

I have been there once myself, they aren't dumb..I flew to Hanoi with those heavy bags no problem! and those same bags on the return trip...fork over the cash!

[macduff]

I'm glad that there still operating. All i'm bothered about is getting from A to B from bangkok-udon thani.

[Harpov]

Come on guys they got to be doing something right. You know 'scum floats and solid hit the bottom'.

[ajarnmark]

I'll tell you one airline I will never fly again. Thai Air Asia.

Offered an internet rate of $25.00 from BKK to Saigon and return. Too good to be true? Yes. With all there surcharges the ticket cost $200.00.

Charged me $164.00 overweight baggage fee from Saigon to BKK. I could have bought the luggage a seat at that price.

Did you bring 32.8kg excess baggage?

They allow you 15kg and charge you $5/kg even if you are 1/2 kg above the limit. Thats the way they can make some extra money to cover their expenses/make more profit.

[jetjock]

According to this "Not the Nation" news quote, perhaps Nok Air has found another way to reduce costs !

Nok Air To Be Relaunched As Noi Air

BANGKOK - The fate of Nok Air was finally announced today when the board of Thai Airways, which controls a 40% stake in the discount airline, unveiled plans to continue the carrier’s operations but with significant changes. The airline will be re-branded as Noi Air, which is expected to attract more customers because “there are more Nois in Thailand than Noks,” according to a THAI spokesperson. The new airline will be aimed at small people traveling short distances through a unique pricing structure that alllows up to 6 people to share a 2-seat row, and waives the luggage surcharge for plastic fiber bags that are filled with local food products intended as gifts for everyone at the office. Confirmed routes so far are Bangkok-Udon, Bangkok-Buriram, and Bangkok-Ubon.