Thai Airways is entertaining the possibility of leasing aircraft and cabin crew as part of its fleet renewal. This is according to the Bangkok Post reporting on remarks from Thailand’s Transport Minister. On Wednesday, the minister instructed Thai Airways to study the matter and consider the benefits and drawbacks that leasing aircraft and/or crew will have for the airline.
The situation at Thai Airways
Thai Airways is struggling with ongoing financial losses as it faces possible closure. In October, Thai Airways’ President said his airline was facing a crisis, citing a variety of factors as contributing to the airline’s woes. Challenges mentioned include a high Thai baht deterring travelers, the continuation of unsustainable routes, and operating costs being too high.
It is because of these challenges and more that Thai may lease aircraft along with cabin crew as part of fleet and service improvement options. In September 2019, Thai Airways was asked to revise its plans for new aircraft orders. The airline was to add 38 units to its fleet but the board postponed the move.
According to CH-Aviation, the idea of leasing isn’t exactly new, as it was mentioned in September:
“If we still need 38 planes, do they need to be of the same sizes or will the cost change? Plane procurement doesn’t necessarily mean they must be bought. They can also be leased,” -Sumeth Damrongchaitham, Chief Executive Officer of Thai Airways via The Nation newspaper.
Leasing crew along with aircraft?
Transport Minister Saksayam Chidchob remarked that he was considering the options of either leasing the planes with outsourced cabin attendants or leasing only the aircraft and that he wanted the procurement issue finalized within this year. However, government regulations may not permit leasing aircraft with outsourced cabin staff. This was downplayed by the minister, saying regulations could be amended to remove obstacles.
With these recent remarks from the Transport Minister, Thai Airways president Sumeth Damrongchaitham says the plan will be updated to include a three-way comparison between direct aircraft purchase, aircraft leasing with outsourced cabin crew, and leasing without cabin staff. At one point there was mention of bringing Thai’s Airbus A340s out of retirement but that prospect seems to have faded.
The idea of leasing has some clear benefits and drawbacks depending on the situation. Leasing aircraft allows the airline to acquire newer, more fuel-efficient aircraft with lower upfront capital. Once the lease is up, the airline can assess whether the aircraft is still needed.
Outsourcing cabin crew offers the possibility of lower salaries, saving the airline money. However, this may have detrimental effects on service to passengers as well as internal organizational friction between existing staff and outsourced crew.
The Bangkok Post reports that 17 of the airline’s 82 aircraft are due to be decommissioned beginning in 2021. Therefore, there is some urgency to this decision if the airline wants to maintain (or grow) its current operations.
Do you think outsourcing cabin staff is a financially prudent move for this struggling carrier? Let us know in the comments!
We reached out to Thai Airways with a request for comment. However, no response was received at the time of publishing this article.