Trends and News

The predicament of Thai Airways

The beleaguered flag carrier of Thailand, Thai Airways, has recently announced that it will be cutting some its routes. Already suspended is the Bangkok-Johannesburg sector which saw its last flight in December 2014. This year, the Bangkok-Madrid, Bangkok-Moscow and Phuket-Seoul routes are scheduled for the chopping board. The company is also reviewing whether to continue the Bangkok-Los Angeles flights. Reports said that to ensure that the airline will return into profitability, 10% of non-profitable routes would be axed. If the situation still calls for more drastic action, an estimated 5, 000 Thai employees will soon lose their jobs.

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So how come that a fantastic airline like Thai Airways spiraled into losses? The airline is renowned for its high quality service with soft-spoken, smartly dressed flight attendants, a high regarded frequent flyer program called Royal Orchid Plus, a state of the art home in Suvarnabhumi and calls one of the most visited nations in the world as its home. The food onboard is impeccable; the business class and first class service is one of the best in the industry. This is an airline that gives extra length to ensure that the passengers keep coming back.

 

The political crises that hit Thailand could be a major culprit. The international passengers dropped a bit as tourism slumped due to the series of violent political protests. Meanwhile the domestic sector saw a steady increase of passengers but Thai is slugging it out with low-cost domestic carriers.

 

Thai Airways is still under the government control and in many cases government officials and politicians have used the airline for their personal ends. This prompted the current CEO to put his feet on the ground concentrating on various moves to return the airline in black.

 

The suspension of non-performing route is the first step. They are also taking about selling excess aircraft and adding more frequencies on performing routes. To compete with low-cost carriers, the airline established Thai Smile but recently it added premium services such that it can no longer be called as an LCC.

 

Will there be a light at the end of the tunnel? Analysts expect at least 5 or more years before Thai can rebound. What we will soon see are reduction of quality of service and more routes being cut. Thai currently has a vast reach within Europe but increase competition with one-stop Gulf carriers is taking its toll. Definitely, a brand new strategy is needed and the management, in a bid to calm the union nerves, vowed to cut jobs only as a last resort.

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