Sense of urgency for drastic THAI reform still lacking among airline's staff, says president

[Lite Beer]

Sense of urgency for drastic THAI reform still lacking among airline's staff, says president
Nophakhun Limsamarnphun
The Nation

Charamporn Jotikasthira, president of Thai Airways International (THAI)

BANGKOK: -- CHARAMPORN Jotikasthira, president of Thai Airways International (THAI), believes a sense of urgency for drastic corporate reforms is still absent among the majority of the airline's 25,000-strong staff despite the national flag carrier's serious financial troubles and potential bankruptcy.

The latest half-year results have shown some improvement, but the airline is still in the red with 2015 losses projected to be Bt297 million, compared to the previous year's massive loss of Bt10.9 billion.

When Charamporn took over as the airline's president early this year, he kicked off a two-year programme to return THAI to profitability after years of chronic heavy losses.

Under this programme, the first stage is to stop losses, or "financial bleeding". Second is to rebuild the airline's strengths, and third is to put the airline back on a sustainable growth path.

So far, the rescue team has put in place the measures to stop the bleeding and started work on rebuilding strengths.

"I think we've done the first stage of stopping the bleeding, and we're now in the second stage as we managed to boost the cabin factor and yields in the first half of this year. Previously, our yields were not so good because we focused on selling cheap economy-class tickets.

"Now, we need to sell more to the right customer segments; that is, those which are not price-sensitive. Our strength lies in corporate and upscale customer segments and those who are time-sensitive," he explained

"For the first half of this year, we booked a loss of Bt12 billion from selling unused aircraft and implemented early-retirement programmes costing around Bt3.7 billion. However, there was a foreign-exchange profit of Bt5.9 billion and tax credits worth Bt2.06 billion, resulting in about Bt8 billion in losses.

"Our target is to achieve 70 per cent of the turn-around programme in January 2016, meaning we would have returned to operating profitability around that time. The overall programme should be completed in 2017, after which we aim to be one of the world's top-five full-service airlines [compared to the current ranking of 19th]," said the airline's president.

The airline is also in the process of disposing of non-core assets to reduce its debt-to-equity ratio, which stands at 6 to 1. A total of 30 properties in Thailand and foreign countries have been put on sale, including those in London, Copenhagen, Jakarta, Sydney and Madrid.

"They are mainly residential and office properties that we purchased decades ago. We'll switch to leasing rather than owning these assets, while reducing overhead by combining the supervision of two or more overseas operations into one.

"We're also reviewing our shareholdings in Novotel, Royal Orchid Sheraton and Amari hotels, as well as BAFS [bangkok Aviation Fuel Services]," he said.

In addition, THAI currently owns a 39-per-cent stake in low-cost carrier Nok Air, and also operates Thai Smile as a premium low-cost airline subsidiary.

According to Charamporn, full-service and low-cost airlines are in different battlefields or market landscapes, so THAI would have to decide shortly whether to maintain its holding in Nok Air.

In his opinion, the low-cost airline model currently works in markets where the flights are five hours or less. However, some full-service carriers such as Singapore Airlines have multiple subsidiaries and affiliates in low-cost and other market segments.

On different aircraft types, there are too many in the THAI fleet, so another 14 jetliners will be sold to streamline operating costs, he said.

THAI also needs to reduce headcount by another 1,400 and re-engineer its business process, while using more automation.

The airline also has to replace the "silo-management" structure with a flatter organisation, in order to reduce management layers.

"We need to lower cost by 20 per cent in the next 18 months," he said, adding that one of the biggest challenges in re-engineering the national flag carrier is the staff's mindset, as many still lack a sense of urgency.

"In fact, drastic corporate reforms should have been done much earlier," he quipped, implying that it is almost too late to rescue the airline.

To create a better understanding and reduce resistance among staff, Charamporn has been frequently holding "road shows" on his turn-around programme with his staff, in the hope of boosting their responsiveness to measures that would help save the carrier.

Source: http://www.nationmultimedia.com/business/Sense-of-urgency-for-drastic-THAI-reform-still-lac-30269125.html

-- The Nation 2015-09-19

[ratcatcher]

"...........one of the biggest challenges in re-engineering the national flag carrier is the staff's mindset, as many still lack a sense of urgency."

That just about sums it up. The aircraft has lost one engine and the flight crew are having coffee.

[NongKhaiKid]

No surprise as it's a national trait as is the ' alright on the night ' mentality.

Look at so many other issues taking fisheries as an example with deadlines set, ignored and then extended.

Is there a word in Thai that expresses urgency ? Maybe there's a word or expression but I doubt it conveys quite the sense of ' urgency '.

[cloudhopper]

Sounds like it's time to sack the ineffective CEO then. Oh wait...

[peterjackson]

I recently had the displeasure of having to visit the THAI Airways office in Chiang Mai. I fully understand why the airline is in trouble. Staffed by lazy, incompetent, unhelpful staff who where all busy playing on their phones.

Over 15 manned desks and no customers.

Their answer to every one of my questions was..... Call the Call Center.

A complete joke and disgrace.

[arthurboy]

All state entities in Thailand are bloated with staff, endless process and bureaucracy and exorbitant staff costs. I bet Thai's overall staff engagement score is excessively 'good'. This correlates with a lack of urgency, poor innovation and complacency.

The message is clear. Improve what works and replace what doesn't, starting with the staff.

[PatOngo]

I recently had the displeasure of having to visit the THAI Airways office in Chiang Mai. I fully understand why the airline is in trouble. Staffed by lazy, incompetent, unhelpful staff who where all busy playing on their phones.

Over 15 manned desks and no customers.

Their answer to every one of my questions was..... Call the Call Center.

A complete joke and disgrace.

And that is why I gave them the flick, no more Thai for me......good riddance!

[Bluespunk]

"Our target is to achieve 70 per cent of the turn-around programme in January 2016, meaning we would have returned to operating profitability around that time. The overall programme should be completed in 2017, after which we aim to be one of the world's top-five full-service airlines [compared to the current ranking of 19th]," said the airline's president."

Always good to aim high, but its not going to happen in that timeframe.

Lost 8 billion according to last half yearly profit report, not as much as expected but indicates that problems will require more time to resolve.

Edited September 19, 2015 by Bluespunk

[baboon]

The staff won't lose their jobs and the government will continue to sling money at it as a matter of national prestige - would a member of the Royal Family or a government official be seen to take a Qatar or BA flight? - so why worry. Who wouldn't be complacent in their position?

[noitom]

Sense of urgency is incongruous with Thai culture.

[JAG]

The staff won't lose their jobs and the government will continue to sling money at it as a matter of national prestige - would a member of the Royal Family or a government official be seen to take a Qatar or BA flight? - so why worry. Who wouldn't be complacent in their position?

They might have to if the airline is stopped from flying to the US and EU!

Edited September 19, 2015 by JAG

[JoePai]

The staff won't lose their jobs and the government will continue to sling money at it as a matter of national prestige - would a member of the Royal Family or a government official be seen to take a Qatar or BA flight? - so why worry. Who wouldn't be complacent in their position?

They will not have to worry about Thai - those people have their own private aircraft if they need to go anywhere.

[shirtless]

Yes you can not talk a company back into profit, here is where actions speak volumes , as will lack of action.

Edited September 19, 2015 by shirtless

[scorecard]

Sounds like it's time to sack the ineffective CEO then. Oh wait...

Well at least he's identified 'lack of urgency', 'lack of appropriate mindset', which are well known to serious change management practitioners.

CEO's / corporate directors with serious responsibility to advise & guide the CEO and management consultants who do this type of work will all tell you that before you even announce 'change' who need to do your homework and identify:

- The internal champions of change - staff who you can see and feel already have the needed mindset and are not in fear of change.

- The early movers - staff who you believe can fairly easily be convinced to join the first group.

- The late movers and those who will never change - and they could well be from every level, including senior and middle management. These are the folks who you need to give a 'package' and get them out of the organization fairly quickly or they will derail the change project quickly and strongly.

Good luck mr. president.

[scorecard]

Sounds like it's time to sack the ineffective CEO then. Oh wait...

Well at least he's identified 'lack of urgency', 'lack of appropriate mindset', which are well known to serious change management practitioners.

CEO's / corporate directors with serious responsibility to advise & guide the CEO and management consultants who do this type of work will all tell you that before you even announce 'change' who need to do your homework and identify:

- The internal champions of change - staff who you can see and feel already have the needed mindset and are not in fear of change.

- The early movers - staff who you believe can fairly easily be convinced to join the first group.

- The late movers and those who will never change - and they could well be from every level, including senior and middle management. These are the folks who you need to give a 'package' and get them out of the organization fairly quickly or they will derail the change project quickly and strongly.

Good luck mr. president.

[gandalf12]

The turn around is the responsability of senior management. Obviously apart from talking they are doing nothing other than collect their huge pay cheques every month

[Searat7]

This airline needs a Tony Fernandes with unlimited powers to effect a real turnaround. The bloated payroll needs to be slashed, keeping only the best people.

[springheeled jack]

I am not knocking thai airlines having flown with them on numerous occasions , they have been told to bring everything up to international level all middle east air crews were trained by british airways I suggest thai airways does the same .

[IMA_FARANG]

Just a thought......how to install a "sense of urgency" in Thai employees and ESPECIALLY the airline executive staff.

Here is what to do.

All staff, especially those in executive and management positions, will have their salary cut by 30% from next pay period.

That amount will be offset by a PROFIT SHARING program which will give all staff a portion of any PROFITS Thai international earns due to good management and better efficiency/productivity.

In that way efficient staff who produce a profit will benefit directly from those profits.

Those staff, and management personnel, who are inefficient and non -productive will not benefit but lose money.

This can be called the "weed out the losers" program.

It is important that this policy be implemented from the TOP down starting with the top management.

[user82374298374]

While I'm no Thai apologist, I take issue with the endless derogatory comments about Thai Airways on this forum.

I travel more than most who post here - ~200,000 air-miles a year, to/from various countries in Asia, various countries in Europe, Australia, North America, and various countries in South America. I fly on Thai Airways whenever possible. Short hops to Singapore or Malaysia are Economy (sometimes upgraded by Thai; I tend to hoard my miles for vacations), everything longer than 2.5 hours is business-class.

They do a pretty good job, for me. The only problem I've ever experienced with them was when they had an abrupt gate-change at Suvarnabhumi, made everyone walk down the external jetway stairs to a waiting bus, then walk up the external jetway stairs at the new gate, in the driving rain, with the Thai ground staff standing nice and dry under their umbrellas while older people struggled up the stairs and all were soaked in the rain. I lit into them pretty well, and they immediately started escorting older passengers up the stairs, helping them with their bags, and shielding them with their umbrellas.

So, apart from that one idiotic logistical issue, I've never had an issue with them in 9 years of flying Thai Airways. And since I fly more than most people who post on this forum, on many different routes, the only conclusion I can draw is that there are a lot of trolls who simply post negative things about Thai Airways customer service because it makes them feel important.

None of this has to do with the serious bloat and economic issues facing Thai Airways; I was angry when they ended the wonderful non-stop BKK - LAX run, and am furthered angered they're ending the one routed through Incheon. The reason I'm angry is that these were great flights, with professional staff, and I never once had any kind of problem on those flights.

[waldroj]

THAI is a classic example of market failure.

As a shareholder, I suggest that THAI’s top priority is to drastically reduce its bloated staff numbers.

It should also be privatized to remove the preferential rights or privileges accorded by the government (with its present 51% stake). Unlikely to happen due to Thai ego to maintain a national flag carrier!

Then let it fly or crash (excuse my bad choice of word) on its own merits.

[Sam Jones]

Did Pres Charamporn calculate in the losses the ban thats gonna come from US and EU ... ?

[h90]

It would be very easy: No money from Government anymore.

Airline is bankrupt in latest 3 month.

Found a new company that buys the airplanes and buildings and takes over the good staff.

Let the rest rott

[novo58]

I recently flew with Thai Airlines from Bangkok to Brisbane( aust). I had no complaints about the flight and in flight service. The price was also right ( at the time).

However ,now looking to return to Thailand and i find the cost of flights with Thai Airlines are around 20% higher than other airlines ( such as Singapore Airlines,

Emirates and Qantas). Though Thai's flight timing are generally better.......................who really wants to arrive at Swampy at 1.10am.

[ourmanflint]

"Previously, our yields were not so good because we focused on selling cheap economy-class tickets."

May I suggest that economy seats in Thai Airways are so bad that lots of people, myself included will fly with just about anyone else given the choice. I'm sure business and first class have always been pretty good, but economy is stuck in the 80's

[Prbkk]

While I'm no Thai apologist, I take issue with the endless derogatory comments about Thai Airways on this forum.

I travel more than most who post here - ~200,000 air-miles a year, to/from various countries in Asia, various countries in Europe, Australia, North America, and various countries in South America. I fly on Thai Airways whenever possible. Short hops to Singapore or Malaysia are Economy (sometimes upgraded by Thai; I tend to hoard my miles for vacations), everything longer than 2.5 hours is business-class.

They do a pretty good job, for me. The only problem I've ever experienced with them was when they had an abrupt gate-change at Suvarnabhumi, made everyone walk down the external jetway stairs to a waiting bus, then walk up the external jetway stairs at the new gate, in the driving rain, with the Thai ground staff standing nice and dry under their umbrellas while older people struggled up the stairs and all were soaked in the rain. I lit into them pretty well, and they immediately started escorting older passengers up the stairs, helping them with their bags, and shielding them with their umbrellas.

So, apart from that one idiotic logistical issue, I've never had an issue with them in 9 years of flying Thai Airways. And since I fly more than most people who post on this forum, on many different routes, the only conclusion I can draw is that there are a lot of trolls who simply post negative things about Thai Airways customer service because it makes them feel important.

None of this has to do with the serious bloat and economic issues facing Thai Airways; I was angry when they ended the wonderful non-stop BKK - LAX run, and am furthered angered they're ending the one routed through Incheon. The reason I'm angry is that these were great flights, with professional staff, and I never once had any kind of problem on those flights.

Have to disagree with you about business class: Thai is inferior to most other asian carriers, specifically Cathay, Singapore and Malaysia. It held onto ancient, unrefurbished planes long after all the others had updated. Dreadful regional seats on flight to Australia...ie, 8 or 9 hours. Woeful.

It is also less likely to see 'attitude' on those other carriers but really quite common on Thai, particularly younger female staff. One expects a bit of DYKWIA from the passengers from time to time...but to see it from staff? .The older ones ( probably the ones they will get rid of) are much better.

Thai holds its own in economy but falls short in business, even though it charges a premium over those other carriers. EG, Bangkok-Taipei return on Cathay, 21,000BHT, Thai direct 33,000

[GiantFan]

Shanghai - BKK flight last week, entertainment system terrible. Two English movies: Ben Hur and Mary Poppins.

Return was about 25% full in economy. I was happy with 3 seats and a good snooze.

[gerry1011]

I love this part:

"Now, we need to sell more to the right customer segments; that is, those which are not price-sensitive. Our strength lies in corporate and upscale customer segments and those who are time-sensitive," he explained...

Bad news for most thaivisa posters who constantly complain about the high prices of Thai Airways (Economy).

[Briggsy]

By selling unused aircraft to a government agency, for example, the Treasury, at prices way above carrying value, THAI would be able to book a large profit on disposal of unwanted non-current assets AND the taxpayer would foot the bill (as usual). Win win! THAI goes back into profit and it is business as usual.

I should be the CEO.

[Srikcir]

Make Thai Airways 100% publiclly-owned and see how fast its employees either "shape up or ship out." Can you imagine someone like Donald Trump or billionaire Berkshire Hathaway's Charlie Munger as the majority shareholder?