Thai Airways faces uphill task to revive its fortunes

[webfact]

BURNING ISSUE
Thai Airways faces uphill task to revive its fortunes
Sasithorn Ongdee

BANGKOK: -- Can national carrier Thai Airways International (THAI), one of the state enterprises reportedly in the twilight zone after being exploited by many groups of people for decades, survive until 2017 even as its rehabilitation plan was approved by the "Superboard" on Monday?

The Superboard is an advisory body appointed by the National Council for Peace and Order in June last year to oversee the performances and business practices of state-owned enterprises.

THAI president Charamporn Jotikasthira revealed at a press conference after the approval that the airline has been given two years to reverse losses over the past five quarters and the Bt9.21-billion loss in the first nine months (ending December) of fiscal 2014-15. It recorded a loss of Bt12 billion in 2013-14.

THAI has been criticised for accumulating debt of more than Bt200 billion, making some believe that the airline is faced with insolvency, with debts exceeding assets and inadequate debt coverage. The airline may perhaps find itself facing serious liquidity problems.

How did THAI, ranked the world's best airline 30 years ago, nosedive? What are the main factors responsible for this situation? Was it mismanagement, overspending or technology?

THAI's newly appointed president, Charamporn, conceded to Nation TV on the Kom Chad Luek talk-show aired on Tuesday night that the airline had taken a beating due to overspending and radical changes in technology.

The airline's salary expense, in particular payments for overtime, has been blamed by many experts as being responsible for the slide. The airline set-up has become so clumsy that it is unable to cope with the rapidly-changing environment. New technology has meant that modern aircraft can fly for longer hours than before, stripping away THAI's competitive edge as the region hub for connecting flights. The rapid growth of low-cost airlines also inflicted huge blows on full-service airlines like THAI in the short-haul market segment.

Though Charamporn argued that THAI's remuneration expenditure, accounting for 24-25 per cent of total expenditure, was lower than many European airlines (30 per cent), the real question is how do the productivity levels of THAI employees compare with that of others.

How can the national carrier avoid entering Chapter 11 of bankruptcy like many other airlines?

The THAI president did not state categorically whether political interference was one of the main causes in dragging down THAI. Charamporn said that if he received a request from a politician, he would turn around and decline, because THAI "does not have any blood to be sucked".

The two-year plan for 2015-16 targets cost-cutting and increase in revenue. This is possible because services will be reduced by 10 per cent, especially in loss-making routes and routes with low potential.

But the target of cutting staff by 20 per cent from 25,000 to 20,000 could come as a shock to employees even though Charamporn insisted that staff reduction was not a priority in the attempt to cut costs.

Employees are one of the key drivers for business success. Only if the airline's employees accept the changes - without protests - would THAI have a chance of surviving.

Besides Charamporn's management skills, his mission also enjoys strong backing from the Prayut Chan-o-cha government, which is trying to put things on the right track after last year's coup.

We can only hope the airline can turn around its fortunes, after all, we don't wish to see the government spending taxpayers' hard-earned money in resolving the national carrier's financial troubles.

Source: http://www.nationmultimedia.com/politics/Thai-Airways-faces-uphill-task-to-revive-its-fortu-30252981.html


-- The Nation 2015-01-30

[NeverSure]

Has anyone actually ever flown on this airline? Prices are through the roof. Is this the Thai way where if you're losing money you raise prices?

I wouldn't fly it anyway because ghosts cause it to skid off runways.

[englishoak]

I heard it was cursed by a terminal case of Freebeehisotus and jacked up prices with sub standard service for everyone else to pay for it..... F Thai airways i hope it goes down the toilet.

[daveAustin]

It'll need a Thai with a big pair of stones or a non-Thai to turn it around.

Sack all the leeches, drop face, drag the airline into the 21st century and LOWER YOUR FREAKIN PRICES! When BA is flying to London for like 30% less, you have to compete with that or offer something extra like a free TV or the option to join the five-mile-high club with willing hostess.

[heybuz]

i fly with them and find them ok, except for the incomprehensible English

[NongKhaiKid]

I thought nothing was impossible in LoS. Next announcement THAI is now the world's No. 1

[Lammbock]

THAI Airways should decrease they ticket pricing.

Edited January 30, 2015 by Lammbock

[Jay Sata]

As all the above posters point out poor service,high prices and two many freebies for well connected families.

On their domestic routes they need to ditch those boxed meals on the one hour trips.

The problem is how do you tell a Thai they are doing it wrong?

Edited January 30, 2015 by Jay Sata

[steve187]

I see they are cutting one flight from Heathrow, and making it a one a day A380 from July. Thai have been too expensive with poor aircraft on this route compared with Eva, Ba and the middle east carriers,

Edited January 30, 2015 by steve187

[kamahele]

The big problem with Thai is that it is beholden to the government and to politicians. The asset sales and job reduction strategy announced the other day is a great start to turning this failing business around. I hope it isn't too late. If they really want to save it, they should sell it to private investors.

[realenglish1]

I flew last month on Thai airways Not by design. I was with Lufthansa but the connecting flight was very late So they switched me to Thai airways from Frankfurt to BKK.

I must tell you I was very unimpressed. Actually the plane was old late 90s Touch Screens on the monitor did not work properly. The seat did not recline properly.

The staff was nice I will grand you that but the food was not good. I have had better food on other airlines. I also checked the price for this leg of the flight and over 30% more.

30% For what. Bad touch screens and seats.

This is their first priority. Not smooth as silk more line wool. The first thing that needs to be addressed is the cost of flying with Thai.

If you drop prices they will come If you hold prices then their are many options other than Thai airways and just because it is named Thai holds no water with travelers

Price is what matters PERIOD

I was flying Lufthansa for 35 % Less than Thai was charging and the service was great The aircraft Good No problem with seats or Touch Screens

[bkk_mike]

I see they are cutting one flight from Heathrow, and making it a one a day A380 from July. Thai have been too expensive with poor aircraft on this route compared with Eva, Ba and the middle east carriers,

Since they (finally) put planes with seat back tvs on this route, it's not been too bad. If you're over 6 foot, BA, at least in regular economy, is dangerously cramped, and their planes don't compare well internally with the current Thai ones, and I'll assume the A380s are fitted out to compete with Emirates, Qatar and Etihad, so should be nicer still.

Moving to the A380 probably forced Thai to give up it's second landing slot as they need longer gaps between planes (because the wake in the air is so much bigger, it would have needed a more expensive landing slot.) At least they should make some money from the slot they're giving up...

[maidee]

rich Thai will continue to fly with THAI

THAI VIP, directors, family, will also still fly thai, as it is FREE for them

[trawler]

rich Thai will continue to fly with THAI

THAI VIP, directors, family, will also still fly thai, as it is FREE for them

[/quot

Flew Zurich-Bangkok last month in business class.When we boarded were told that oops in flight entertainment system was down on the whole aircraft........11hrs.Other carriers such as Cathay/Singapore Airlines offer passengers vouchers etc etc.Thai nothing...............

[EyesWideOpen]

Edited January 30, 2015 by EyesWideOpen

[Fiddlesticks]

the real question is how do the productivity levels of THAI employees compare with that of others.

Surely this is a rhetorical question! The simple answer is THEY DON'T. Putting the words 'Thai employees' and ' productivity levels' in the same sentence is a joke.

[DonaldBattles]

I feel the the Military Lawyers are on the right track with Thai Air. These moves are just the beginning. As I expect the boys in brown to be around 3 or 4 years they have a good opportunity to clean house. Pricing is a major issue and am sure they understand this.

For domestic flights if you look at the colorful printed boxes they cost more than the food does. The food super sucks! Just a small sandwich in a foam box or paper plate would be better.

The AB 4 engine planes seat about 192 people on a flight to LA. The former head of Thai said that these planes loose money when they take off even though they might be full. They have 6 of these planes and they need to sell them quickly.

Reduce the domestic flights and let the low cost people keep them. Thai can regain it's former position by specializing on international flights.

[petercouz]

I have dropped down to Silver level now - I am flying budget airlines everywhere all over Asia and only use Thai for long haul to the UK and Melbourne (where strangely enough the budget long hauliers are not particularly well priced) - I dont care about the lounge use - the food and drink is pretty awful in Thai lounges, so prefer to spend on a real coffee and food in the main shopping areas of Suvarnabumi - I will miss the generous excess baggage, but can buy the same allowance and still be quids in on Air Asia or Jetstar.

I booked a ticket to Melbourne last July and had an Award for upgrade or 50% off freebie I wanted to use - flying date January - could i get any upgrade or freebie granted? No - not one seat came up in 6 months - that is just appalling - and now that they have dropped me to Silver i expect i have lost the Award completely.

another thing that happens only in Thai, and that is about one hour after take off the Entertainment system shuts down and you have to reselect you movie - happens almost every time for the last couple of years at least. - why?

They are very stingy with the wine as well - usually not serving it until well after the meal has been served and then locking it away as quickly as possible - I am not a heavy drinker on flights but i do like at least two glasses 'with' my meal, not after it!.

Food can be okay, but often not -so it is hit and miss - but the big drop in service that i have noticed is in Business class - I used to fly it regularly when i was a salaried sales rep - but now work for myself and only use business when i use airmiles (they rarely ever upgrade for free - even when they have space up front) - the food is really basic - not a patch on SQ and other airlines, which can be luxury - in Thai Business the meals are boring and basic to say the least () the cheese platter a slice of bland something, a plastic wrapped Cracker Barrel and a Baby Bell - plastic wrapped crackers and three or four sour pip filled grapes - a very sad decline in standards - it did not used to be like that.

Someone on this thread mentioned the incomprehensible English - quite true - i dont know where they learned it but their reading and pronunciation is simply appalling

Happier to fly Budget any day now and i will not be using them for long haul now that i have been dropped to Silver - bye bye Thai!!!

Anyone else recognized my experience?

[Johnnie99]

Surely the headline should be 'an upward climb"?

[tolsti]

I feel the the Military Lawyers are on the right track with Thai Air. These moves are just the beginning. As I expect the boys in brown to be around 3 or 4 years they have a good opportunity to clean house. Pricing is a major issue and am sure they understand this.

For domestic flights if you look at the colorful printed boxes they cost more than the food does. The food super sucks! Just a small sandwich in a foam box or paper plate would be better.

The AB 4 engine planes seat about 192 people on a flight to LA. The former head of Thai said that these planes loose money when they take off even though they might be full. They have 6 of these planes and they need to sell them quickly.

Reduce the domestic flights and let the low cost people keep them. Thai can regain it's former position by specializing on international flights.

Are you sure about the seating capacity?..... the A340-600 in the 3 class configuration on Thai metal seats 267.

[arkom]

Flew on Thai BKK-NRT-BKK, upgraded too business class for free from my credit card, this was o the only reason I used them. Airport lounge was old and worn, food and beverage was just awful. Plane used on this route was the A380 and to be honest nothing spectacular about it, for business class the seats were pretty cramped and when you use the lie-flat for sleep, the space for feet was also pretty tight and was hard to get any sleep.

Had the opportunity to fly on Emirates BKK to Paris roundtrip on Business, also on the A380 and that was an experience! Very comfortable and much better service overall. Not only that it was more than half the price of Thai plus you get free airport pick up to and from home/hotel.

Only benefit of flying Thai is that they fly nonstop, but for more than double sometimes triple the price its just worth it. Oh and the fact that Thai's like to fly with them only because they don't want to use English.

Edited January 30, 2015 by arkom

[Caveat Emptor]

THAI Airways should decrease they ticket pricing.

Yes but it doesn't fit the usual business model here of when losing money put the prices up.

[Ulic]

The problem is they operate like Wall St, bankers. It does not matter how much money they loose they get paid humongous bonuses.

[EyesWideOpen]

EVA beat them on price comprehensively on every route - I don't know how Thai air get any customers at all !

Given their insane pricing , I have wondered about that too. Maybe there are

a few Thais on board that want to be able to converse with the stewardess,

and the rest of the people are all relatives of VIPs and board members... :-)

[geriatrickid]

Has anyone actually ever flown on this airline? Prices are through the roof. Is this the Thai way where if you're losing money you raise prices?

I wouldn't fly it anyway because ghosts cause it to skid off runways.

It depends on where and when. Airline pricing is influenced by capacity. You also have to differentiate between long haul and short hauls. Anything under 3 hours is short haul for TG. There is no argument that TG is much more expensive than the airlines it competes with on the short routes. However, TG is a full service airline, while Air Asia, Scoot, Lion Air, and others are not. Keep in mind that one gets bled to death on the extra charges with Air Asia. TG comes in at a generous baggage allowance that was increased to 30kg, while the basic allowance with Air Asia and others is 15 kg. Keep in mind that when there are IROPS, TG responds. Good luck getting someone to help you at Air Asia. When TG competes with other legacy airlines on short but profitable routes like Cathay, TG is competitive.

What I expect will happen is that TG will exit the short hauls, unless they are on profitable connector routes like Chiang Mai or Phuket. Everything will be handed off to Thai Smile or dropped.

The loads in certain long haul TG routes are quite high. Therefore there is no need to reduce the fares. Keep in mind that direct flights are always more expensive than those with a stop or more. However, for the sake of illustration, let's look at some of the popular routes in Y for April: FRA -BKK; LH - is 3000 baht more expensive than TG. On the very popular route of CPG-BKK, Norwegian is 3000 baht less expensive than TG, but SAS is almost 7000 baht more expensive. On LHR -BKK, BA's fare is similar to that of TG and EVA's is just shy of 3000 baht less.

Know what I see? a consistency in the pricing. I won't say price fixing, because the airlines assure us that they don't do that and surely we can believe the airlines when they tell us that.

Yes, one can find a fare on Emirates, or some of the Chinese carriers for 30% less. However, not everyone wants to transit the ghastly Abu Dhabi or Doha airports. *A airlines in North America are often priced significantly higher than Turkish Airways. However, the number one complaint from NA originating pax is the chaos and misery that is the Istanbul airport. My point here is that one cannot judge an airline by fare alone.

You will be shocked to know that TG has one of the lowest business class fares out of CDG. Part of this is due to its use of an AB 380. The load factors were pretty good last year. Big contrast with the FCO-BKK route with low load factors and high costs using an ancient plane. I know I flew it in first and the cabin had 2 couples on reward tickets and me. Economy was 65% full. This brings us to the next issue: Too much capacity.

TG is going to have to slash its capacity. It needs to get its load factor up to 95%. This means overbooking, something TG has always tried to avoid Air Canada in contrast which went from massive losses in part by cutting capacity and overbooking, It has left customers unhappy but made it a profitable airline.

The other big issue is the ticket distribution system. It seems, and it is just my observation, that some favoured ticket agents get special deals on ticket fares. These fares often beat what's offered online. Who are these agents and why did they get favoured status? Well, that brings us back to who has connections with someone, doesn't it? I expect that if TG tries to sort out that issue it won't get far. Friends in high places may block it, and therein lies the real problem. There is too much outside interference, whether it be in procurement or in hiring. Doesn't it seem odd to you that some of the commercial airports are owned by the military? The alleged obligation to purchase fuel through certain suppliers also causes concern.

[geriatrickid]

The problem is they operate like Wall St, bankers. It does not matter how much money they loose they get paid humongous bonuses.

LOL, bonuses are not paid to "Wall Steet Bankers" unless they make the profit targets. It's a myth. Plays well to the masses, but not true.

[OZEMADE]

I am a Royal Orchid Plus member of Thai Airways, but have not flown with them for some 4 years since their prices went up, their travel miles dropped back to 3 months or pay extra for a year travel miles, their food and service went down and the plane itself was not cleaned, bloody disgusting and I told them so as well.

I then started flying Emirates and Qantas over the last 4 yrs and went with the cheapest direct flight from Sydney to Suvarnabhumi return. Pay a bit more for the direct flights and I also have to book at set dates, which sometimes is not the cheapest. But the food, drinks, service, entertainment and baggage allowance is worth the bit extra. Honestly, have never had a drama with either.

Then it happened, I then saw a cheap flight with Air Asia Syd to Bangkok via KL. The plane was really not very clean, it had no entertainment, if you wanted entertainment; you got a small screen and plugged it in all for a price, meals for a price, drinks and even a blanket for a price, baggage for a price, and it went on. In the end it would have worked out about the same price as Qanta. And if you don’t know what the current going rate is for Ringgit they get to you on the conversion. Then you swap planes at KL and hang around for a couple of hours. After boarding for the rest of the journey, they must have moved the seats closer to fit more passengers in as I am 6’1” and the guy beside me was 6’4” I had trouble getting in and stretching my legs under the seat in front to stop cramping, he had hid no chance and had his legs out in the passage. Could not wait to land in Bangkok. As I had already booked return flight with them had the same problem on the return journey, with the problem of almost missing the connecting flight because of a hold up at customs and just made the flight.

So all in all, I will now be travelling with Qantas or Emirates once again will have to pay the extra but will be more comfortable. Unless someone on TVF has a better idea, let me know.

[Robroona]

Bringing THAI back to an even keel, and then forging ahead, might just prove TOO difficult. Forget about the gravy train, forget about the high staff levels, forget the high prices.

Quite simply, they are in a market in which many competitors have organised themselves into very efficient entities. Long time since I last saw empty seats on Emirates or Singapore on long haul.

And these examples, prime targets in the competition, are working efficiently and profitability levels NOW. The xxxx year plan for Thai needs to be a one year plan, for as we all know what happens here with long term planning

[DonaldBattles]

The Airbus 340-500 was a non stop flight from BKK to Los Angles. I looked at the seating arrangement. They had to reduce the load factor so more fuel could be added for the 17 hour flight.

I would guess that corruption and nepotism probably represents at least 10% of the loss factor for Thai. If they were to dig into these aspects they would find a long chain of everything you can imagine that goes back for ever. Trying to break this kind of BS will take a long time. You are trying to change the hearts and minds of people who thrive on something free or dishonest.

At least the boys in brown can reduce it to only cover themselves. For the victors belongs the spoils.

[DonaldBattles]

I sure agree, Air Asia really sucks. They are about as low class as you can get. Further compounded by what appears to be a serious pilot error for the plane they lost. Air Asia has the most un friendly web set I have ever seen. I checked it the other day for the price for my wife to go to Phuket and found that they automatically charge you 300 Baht for checked baggage unless you look close and cancel it. Real BS.

I also sometime forget that all domestic US airlines are nothing less than horrible to go along with the searches in security. Delta used to be the pride of the south until deregulation and now it really sucks. I have logged more than a million miles on Delta a long time ago when they were great.