In October the President of Thai Airways told employees that the airline was on the verge of shutting down with only a month’s runway to execute a turnaround. The airline promptly worked to walk that back, suggesting it was hyperbolic, but it nonetheless underscored that Thai Airways is underperforming and in financial difficulty, propped up by the Thai government.
I’ve very much enjoyed my travels on Thai, and found them to be a very convenient member of Star Alliance for travel around Asia and between Asia and Europe. They even served what’s my third best meal ever on a plane.
Thai Airways Duck Rice Soup
However their fleet has long been a hodgepodge and many of the decisions such as where to fly have seemingly been made for reasons having nothing to do with advancing the business interests of an airline. The head of the airline even says big losses are ‘normal’.
Instead there are four major underlying issues faced by the flag carrier:
- Corruption: Procurement, whether of planes or light bulbs, has often been done for reasons other than serving the airline’s interests or at prices that aren’t the best the airline could get. And this leads to suboptimal decisions, like a fleet of 80 widebodies that lacks more than 14 of a single type, leading to scheduling challenges and higher maintenance and training costs and an inability to reach cost efficiency through scale.
- Incompetence: Company executives in many cases have owed their position to patronage rather than skill.
- Bureaucracy: While they want very badly to lean on technology for ancillary revenue they’ve underinvested in tech (perhaps, given their other challenges, this has been a saving grace in terms of waste avoidance). Thai law and custom often places form over sound decision-making as well.
- Competition: Thai could manage in spite of being so poorly managed when the Thai economy boomed, tourists came in droves, and there wasn’t nearly as much competition from low cost carriers. They no longer have anything close to a monopoly on domestic operations, and they face competition on most routes with strong traffic and yields.
I was reminded of Thai’s bureaucratic challenges when a reader shared their frustrations trying to purchase an advertised value pack of roundtrips valid for travel to Cambodia, Laos and Vietnam. Thai promoted the product but only sold it in person at sales offices and then only at sales offices in Bangkok.
First the reader tried to buy these tickets in-person at a sales office in Pattaya. Then they tried to buy the tickets from Thai Airways over the phone. Both attempts were unsuccessful. He sought help from the airline over Twitter with no reply.
Even people who want to buy products the airline offers are hampered from doing so because of the carrier’s bureaucracy and technological limitations in actually taking customers’ money.
Personally I’m still banking that the Thai carrier will manage to bail itself out by selling Thai frozen meals.