Resignation of Thai Airways' president no shock as dark skies loom

[webfact]

ANALYSIS
Resignation of Thai Airways' president no shock as dark skies loom
Achara Deboonme,
Vipaporn Jitsomboon
The Nation


Sorajak Kasemsuvan

BANGKOK: -- Sorajak Kasemsuvan's resignation as president of Thai Airways International last week was no surprise, given external and internal pressure he has had to endure throughout the past 14 months.

Externally, THAI and other premium airlines have been affected by the rapid expansion of low-cost airlines. The situation will only get worse. According to The Wall Street Journal, at least 10 new low-cost carriers are set to take off in Asia in the coming year, expanding fare choices for consumers but squeezing airline margins even more.

According to the International Air Transport Association (IATA), though Asia-Pacific airlines' EBIT (earnings before interest and tax) margin will rise to 4.4 per cent in 2014 from 4.1 per cent this year, their profitability is subdued by weakness in cargo demand and the expect?ed delivery of 710 new aircraft.

THAI this year took delivery of 17 new air?craft, though that number is dwarfed by orders from airlines based in the Persian Gulf.

With high operating costs, Sorajak said in a recent interview with The Nation, THAI cannot survive the fierce competition. He believed the profit margin of 1.5 per cent was too thin to weather the storms, and this highlighted the need for corporate transformation. He envis?aged spinning off business units, keeping only the aviation business.

According to a close aide, this idea did not receive much of a welcome from the THAI board when Sorajak sought their approval last Friday.

"The president has pondered resignation for some time, seeing that his hands are tied. He could not have a say in the route planning or a cost-cutting programme for business units. His time has been devoted to meetings, mostly concerning non-aviation businesses," the source said.

According to the source, with the board's approval, the commercial department in the past year resorted to easy means to boost revenue.

A research note from Asia Plus Securities said that because of intensive sales promotions, THAI's passenger yield in the second quarter was cut by 8.4 per cent from the previous quarter to only Bt2.56 per passenger per kilometre. Though jet-fuel prices dropped in the quarter, THAI witnessed an increase in employee expenses including overtime and bonus pay.

After the company reported a loss of more than Bt6 billion for the first nine months of the year, a promotion was launched recently. A one-way ticket to Chiang Mai is priced at only Bt1,700, a big discount.

All eyes are on the fourth-quarter financial results. It is very likely that THAI will end the year with a net loss, despite the booming tourism industry.

Taking the helm in October last year, Sorajak succeeded Piyasvasti Amranand, whose employment contract was also terminated prematurely even though he was praised for cost-cutting programmes.

In the past four-year period, THAI has welcomed two presidents and is about to appoint a new one, while Ampon Kittiampon has firmly held the chairmanship of the board.

It is difficult to see how a major aviation company can flourish with such high turnover at the top.

-- The Nation 2013-12-23

[MaiChai]

Middle eastern airlines have cheap fuel, plus invariably employ staff from cheap countries. 710 new aircraft? Hope alot of these are fuel efficient Dreamliners? Tough call for Thai. Anyone got good ideas for them?

[EyesWideOpen]

Bring back Piyasvasti Amranand....... He seemed to know how to profitably run the airline.

[wiki12]

Late last month I was checking on skyscanner flights from Glasgo to BKK. The Thai Airways flight left Glasgow, arrived and left Dubai and arrived in BKK at exactly the same times as the Emirates flight I booked (codeshare).

The difference in price? - Thai was 300% more expensive!

Edited December 23, 2013 by wiki12

[NongKhaiKid]

Middle eastern airlines have cheap fuel, plus invariably employ staff from cheap countries. 710 new aircraft? Hope alot of these are fuel efficient Dreamliners? Tough call for Thai. Anyone got good ideas for them?

Many posters will be able to correct me but I think the majority shareholder is the Finance Ministery.

Anything wide open to politicians is in trouble with their ' me, me ' attitude. Perhaps run as an independent commercial entity with competent management and not appointed cronies would help.

They also have a massive freebie programme for those and such as those but that's no surprise,

[JoeThePoster]

40+ Vice Presidents, surely someone will step up to be the next scapegoat.

[Thai at Heart]

40+ Vice Presidents, surely someone will step up to be the next scapegoat.

Hahaha. What a layout.

I love ISO. It beings such confusion when it could all be so simple. I didn't look. Is the man at the top of the pile Senior Vice President?

[Jay Sata]

Thai is an inferior flag carrier with poor service and expensive fares .

On a par with British Airways and Qantas which are other airlines with a tired format,old aircraft and crew well past their

sell by date.

The problem with the executives is they have never travelled incognito cattle class on their airline so don't appreciate what's wrong.

I'd make all candidates for the chief exec job spend three months sitting in economy on all the routes before the board to select the winner.

[jalansanitwong]

Thai airways is no different from any other National flag carrying airline.

They all go bust every once in a while and the government props them up with taxpayers money or protects the most profitable trunk routes.

Most American airlines have gone bust but are now merging which doubles their debt and ageing fleets. (yankee economics)....print money.

Most European carriers went bust years ago but still operate because they are protected.

Thai airways will go bust but continue to operate because of taxpayer generosity.

HI-SO people travel free or on discounted 1st class tickets. This will never stop. Its their airline.

farangs sit down the back in economy class with their poor Isan wives and subsides the crooks sitting up front.

Welcome to scam airlines.

[55Jay]

Now competing with the rice pledging programme for cash infusions.

Decades of internal corruption, poor management and finally government MPs holding back cash, finally caught up with Gulf Air as I was leaving, and reading this article reminds me of that.

In my flight searches, Thai rarely, if ever, comes up in the first few pages of results, sorted by cost. After sifting through the mainland Chinese airlines, my choices are usually between the American airlines and Korean. Will be trying Asiana on my next LAX run, but Thai just never seems to come up on the radar.

[Jay Sata]

I can't disagree with your point.

The best mystery shopper to discover how an operation works is the potential boss who dresses down and fly's with the plebs.

Three months of that will soon tell him what's wrong.

I like Michael O Leary's model. You get what you pay for and you pay for what you get.

I don't need a soft drink or a packaged meal on a short flight to Khon Kaen or Chiang Mai.

I would like a price drop for the same flight which would wipe out Air Asia.

[Spare]

Piyasvasti Amranand and his wife are DEMS, and friend of Mark.

Hence he was removed.

BTW, he wasn't that good anyway. I mean a lot of corp leader can do at least the same, if not a lot better in that position.

[JoeThePoster]

Problem is that packaged meals and other useless add-ons provide for Uncle Somchai and his extended family. Passengers wouldn't bad an eyelid if those were discontinued, but please give a thought to the little nieces and nephews being chauffeured around to and from school in their luxury cars.

[Sydebolle]

A former ACM - fat like a pig - said it 20 years ago already, "Thai sucks".

Well, nothing learnt over a generation. I - for one - choose anything but Thai if available. Dirty aircraft, rude staff all the way from check-in to lost-luggage at the other end and a very own interpretation of punctuality.
Get the Ministry of Finance to sell their 70%, get the government staff to pay the normal fare (and pick their airline of choice) and then things might, repeat might, get better - also helpful would be to look for experts and not always list "Thai Nationals only". Latter has been proof enough for incompetence and malgovernance all the way. Sony runs by a non-Japanese and if you want to have a truly proud flag carrier of the Thai flag then opt for the best candidate and give him/her the tools to run the show. Pathetic!

[PaullyW]

Middle eastern airlines have cheap fuel, plus invariably employ staff from cheap countries. 710 new aircraft? Hope alot of these are fuel efficient Dreamliners? Tough call for Thai. Anyone got good ideas for them?

Perhaps most simply THAI could bring in talent from outside Thailand to 'shake things up' a bit. Most other competitive airlines do so in their exec lineups.

[monkey4u]

A former ACM - fat like a pig - said it 20 years ago already, "Thai sucks".

Well, nothing learnt over a generation. I - for one - choose anything but Thai if available. Dirty aircraft, rude staff all the way from check-in to lost-luggage at the other end and a very own interpretation of punctuality.

Get the Ministry of Finance to sell their 70%, get the government staff to pay the normal fare (and pick their airline of choice) and then things might, repeat might, get better - also helpful would be to look for experts and not always list "Thai Nationals only". Latter has been proof enough for incompetence and malgovernance all the way. Sony runs by a non-Japanese and if you want to have a truly proud flag carrier of the Thai flag then opt for the best candidate and give him/her the tools to run the show. Pathetic!

I prefer Emirates for my trips to Aus, but price counts also

I am going on Thai in 2 weeks with a 14000 savings compared to other airlines

I have never had bad service with Thai, always happy to help me.

On the other hand Qantas is not even in the race, old hags giving piss poor service, and Sydney check in ha.

[bangon04]

Bring back Piyasvasti Amranand....... He seemed to know how to profitably run the airline.

Yes he obviously stepped on some toes...

THAI is not really a business, it is a matter of subsidised national pride, and as such it is no surprise that it is losing money.

Free seats for anyone with connections to the Thai establishment, and their entire families.

[toolpush]

Stop the Hi-So freebies. I fly business class on Thai (company paid) to Beijing every other month and I am probably one of the few paying customers. You can tell with all the brown nosing and super extra special Wai's by the staff who the free fliers are.

Disgusting really.

[Jay Sata]

Middle eastern airlines have cheap fuel, plus invariably employ staff from cheap countries. 710 new aircraft? Hope alot of these are fuel efficient Dreamliners? Tough call for Thai. Anyone got good ideas for them?

Perhaps most simply THAI could bring in talent from outside Thailand to 'shake things up' a bit. Most other competitive airlines do so in their exec lineups.

Thailand would never allow that.

You have to understand the world is wrong and Thai philosophy is the only way.

[geriatrickid]

Most of the freebies extended by TG are the same benefits super frequent flyers are granted on other airlines. It goes against the grain to hear that, since it doesn't reinforce the stereotypes voiced on this thread. TG is subject to some significant fixed costs that no CEO has much power to change. Here are some of the costs that need to be considered;

1. TG's relationship with the Thai military. Have a look at who some of the advisers and board members are. Ask yourself if it is really appropriate that the military have such a close link to a civilian airline.

2. Airport facility rentals. Ask yourself, which entity has a stake in the maintenance and provisionment of the airline. I can't say more as this could lead to a slander charge, And no, it's not PTP or Thaksin related.

3. Pensions. TG like many legacy airlines is carrying some significant pension and benefit liabilities. Any attempt to deal with the issue will create significant problems and no government has had the strength to deal with it.

[slapout]

When you give perks to the politicians, the employees and family, then throw in those who know someone with clout/connections, there are not too many seats left on the National flights, and those mentioned are really having a field day on the international destinations, where visa requirements have been relaxed.

When you consider the overload at the top in the Thai system from the military, private sector, and government, then deduct the tea monies, etc posh contracts awarded, its surprising they have enough net income to do upkeep on the facilities, much less the aircraft.

[blokker]

Bring back Piyasvasti Amranand....... He seemed to know how to profitably run the airline.

Yes he obviously stepped on some toes...

THAI is not really a business, it is a matter of subsidised national pride, and as such it is no surprise that it is losing money.

Free seats for anyone with connections to the Thai establishment, and their entire families.

Spot on: crony capitalism.

But I heard from a credible source, a guy with a mega-phone who blocked traffic in Bangkok,

that will appoint a hand-picked People's Council that will eradicate corruption in the country.

Seeing how well THAI is doing under the patronage of these wise people, of course I do fully believe him.

PS: and lets try not to misunderstand THAI-ness

[lostmebike]

Late last month I was checking on skyscanner flights from Glasgo to BKK. The Thai Airways flight left Glasgow, arrived and left Dubai and arrived in BKK at exactly the same times as the Emirates flight I booked (codeshare).

The difference in price? - Thai was 300% more expensive!

Know what you mean. Thai are so pricey these days.

Last time I flew with Thai was back in 2009, on a visit back home. It was the only direct flight I could get and I couldn't help noticing how decrepit and old the plane and staff were! It was sad way to see how the airline had declined since my first trips with them back in the late 90's.

[ginjag]

Feedback time Thai Airways, MOST of the posters WERE Thai passengers from way back can you understand why they are not now---read the posters remarks, they are not bashing Thailand they are raising their personal feelings on the service provided, overall EXPENSIVE- BADLY RUN- MORE UPDATES NEEDED.

The seating on all -1st -- Business-- economy --sub standard compared to other major carriers.

[Ulic]

Bring back Piyasvasti Amranand....... He seemed to know how to profitably run the airline.

Can't be done, cannot loose face.

[bigbamboo]

40+ Vice Presidents, surely someone will step up to be the next scapegoat.

More than forty Vice Presidents!

I know trolley dollies have a certain reputation in the travel business (QANTAS wasn't known as Queens And Nymphomaniacs Travelling As Stewards for nothing) but I never realized there was so much vice in THAI.

[Thai at Heart]

Problem is that packaged meals and other useless add-ons provide for Uncle Somchai and his extended family. Passengers wouldn't bad an eyelid if those were discontinued, but please give a thought to the little nieces and nephews being chauffeured around to and from school in their luxury cars.

But please, the juice must stay. It is a unique masterpiece in airline catering.

For a country with add much fruit as Thailand to call that juice is incredible. It actually made me wonder if oranges tasted differently in thailand.

Also good for cleaning the silver.

[geriatrickid]

Feedback time Thai Airways, MOST of the posters WERE Thai passengers from way back can you understand why they are not now---read the posters remarks, they are not bashing Thailand they are raising their personal feelings on the service provided, overall EXPENSIVE- BADLY RUN- MORE UPDATES NEEDED.

The seating on all -1st -- Business-- economy --sub standard compared to other major carriers.

There is a frequent flyer website with a fantastic forum. I suggest you check it out and read some of the very detailed discussions of the problems with United, American, SAS, Air France, BA etc. The UA FF's are on a warpath to get the head of the UA chairman Smisek, who seems to be the most hated CEO of an airline. My point being, that whatever the faults are of TG, it is still head and shoulders above most US and EU airlines judging from the comments of people who log 50,000 miles + in any given year.

I was on an ANA business class flight on the NRT-BKK corridor and the meal of minced stewed hamburger, made me long for anything from TG. The last flight on UA I was offered dried out shrimp and noodles as my meal in J class. Again, anything from TG would have been better. The seat pitch and personal space of TG premium classes still beats most of its competitors If you want to experience a cramped coffin, try UA business class on a B777 with 2-4-2 seating. Even worse is the new high density business class seats being introduced by Swiss, LH and AC. Everyone loves the middle eastern airlines until there's an IROPs situation or worse an outbreak of an infectious disease on their routes.

[ppmacready]

A former ACM - fat like a pig - said it 20 years ago already, "Thai sucks".

Well, nothing learnt over a generation. I - for one - choose anything but Thai if available. Dirty aircraft, rude staff all the way from check-in to lost-luggage at the other end and a very own interpretation of punctuality.

Get the Ministry of Finance to sell their 70%, get the government staff to pay the normal fare (and pick their airline of choice) and then things might, repeat might, get better - also helpful would be to look for experts and not always list "Thai Nationals only". Latter has been proof enough for incompetence and malgovernance all the way. Sony runs by a non-Japanese and if you want to have a truly proud flag carrier of the Thai flag then opt for the best candidate and give him/her the tools to run the show. Pathetic!

They are not ''rude'' staff.

They are just showing their Thainess.

[hansnl]

Middle eastern airlines have cheap fuel, plus invariably employ staff from cheap countries. 710 new aircraft? Hope alot of these are fuel efficient Dreamliners? Tough call for Thai. Anyone got good ideas for them?

Perhaps most simply THAI could bring in talent from outside Thailand to 'shake things up' a bit. Most other competitive airlines do so in their exec lineups.

Please refrain from talking dirty things.

Talents from outside talent to shake up something Thai?

You mean farang?

Impossible!

Thai company is the best, Thai people are the best.

Accepting things from farang is huge loss of face.

That said, outside talent is not that good.

Anybody can do good things in a short time, if having the power.

Running a company long time, that is the xrux, and that is where nearly all outside talents totter and fall.

And get lost with a gold handshake.....