Thai Airways is in a spot of bother after losing lucrative revenue routes to low-cost-carriers. Now, even the airline president is saying that the carrier might close if the employees don’t band together to keep it alive.
Who are Thai Airways?
Centered out of the hub of Bangkok, Thai Airways is one of the big premium carriers operating out of South East Asia, alongside Singapore Airlines (Singapore), Cathay Pacific (Hong Kong) and Malaysia Airlines. It has a fleet of 84 aircraft, including six Airbus A380s. It flies to 74 destinations and is a member of Star Alliance.
The airline employs 20,000 people and is the national carrier of Thailand (51% government-owned). But the airline has started to feel the pressure from low-cost carriers in the region, particularly on northern routes linking to Vietnam, Hong Kong and China.
This pressure led to poor performance in the first half of the year, suffering a loss of 6.44 billion Baht, or $197 million USD – no small amount. This was added to the debt of the company which is currently well over 280 billion Baht.
What is happening now?
Recently, the president of Thai Airways, Sumeth Damrongchaitham, made everyone very much aware of how dire their situation is:
“The competition is very fierce this year,” Mr. Sumeth said to Bangkok Post, “THAI is really in a crisis. Next year it must do its best. If staff are still unaware and do nothing, they will not have enough time to fight back. Today very little time remains. Today there is no comfort zone. Everyone will die if the vessel sinks,”
He has started to take action to reduce costs, firstly by removing excessive salaries and perks from management salaries and making their catering carry zero inventory (as in every meal is ordered from the supplier and given to a customer, none in storage).
“There will be no other rewards for the staff, because the top prize is the survival of the company,” continued the president in the same interview.
The airline has also put their future aircraft orders on ice, the airline was set to incorporate 38 new aircraft over the next few years into its fleet, but has now decided to hold off accepting these aircraft (and paying for them!).
Plus just earlier this week, the airline actually transferred six of its main routes to its low-cost-carrier subsidiary, Thai Smile. Routes to Vientiane, Luang Prabang, Phnom Penh, Hanoi, Ho Chi Minh, Yangon, from Bangkok are all to be exclusively operated by the cheaper alternative. This should give the airline a fighting edge against the low-cost-carriers.
Lastly, the airline has actually gone to their customers and asked them for cost-cutting ideas. Perhaps a bright-eyed fan or two will come up with a new novel way to win back passengers for the struggling Southeast Asian carrier.
What do you think? Let us know in the comments!