Four Basic Reasons Thai Airways is Floundering on the Verge of Collapse

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.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. The good news for Thai’s employees is that the government won’t let them fail for the same reasons of patronage and pride.

  2. FYI: Looking at the 10 year and 25 year GDP constant dollar charts on the Trading Economics Website, it looks like the Thai economy has grown significantly in the last 10 years and 25 years.

    [No idea how reliable that website is.]

  3. The Thai government has allowed a lot of 5th freedom in the country for any airline that wants it. Because of this Thai has a lot more competition than they would have otherwise: Cathay Pacific, Druk air, Emirates, EVA, Kenya Airways, PIA, & Royal Jordanian. That takes away a lot of their potential customers or forces them to lower prices to compete when they shouldn’t have to.

  4. They failed to compete…and especially so at the premium end: still offerering ‘angled flat’ years after the completion had moved on, miserable lounges in BKK ( crowded, uncomfortable, lousy food), high proportion of flights use buses ( but not separate business bus), tried to charge a premium over competition ( often in the order of 25%+).
    Still , many persevered because the ROP FFP was so good…but then they shredded it this past year, making it largely uncompetitive. A disaster.

  5. Let’s not forget that the royal family uses Thai as if it’s their private jets! On my last flight in First Class on A380 upon checkin I was informed that a princess was on the flight but what they didn’t tell me was so were her handlers and yappity dog! They closed off the front lounge area and lavatories and used the space as party central!

  6. As long as me and my ladyboy “friend” make it to Tokyo this December on our Thai flight it’s all good!

  7. Thai airways will NEVER be allowed by the government and the monarchy, ( I must be careful here because of the draconian Lese Majeste laws in Thailand ) to go bankrupt and cease operations.
    Its called not “Loosing Face”. So sad, this was once upon a time….long long ago…. a truly world class service airline. Soft product really right up there with Singapore. Those days are gone. I would never fly them now, even a discounted business class ticket. Nope.

  8. I love THAI but it’s a mess. Too many aircraft types, inconsistent service in economy and business class. Often fantastic but sometimes shabby. Still better than British Airways though. Poor use of equipment flying wide body on 1 hour flights (BKK/CNX/HKT) no chance of competing with LCCs such as Thai Air Asia, LIONAIR And VietJet. The shambles that is the A340s sitting scattered and rotting around the country. Gettting rid of the old economical equipment (A340s and B747s) and replacing it with A350s and B787s would make a lot of sense. The service can be great and competitive if they want. Stop the HiSos and hangers on flying for free and favours and offer solid promotions to the public. The ROP membership was diluted in October making it harder to obtain rewards for loyalty. No wonder many people are avoiding THAI (and therefore often avoiding the country). I predict it will always be supported by the government and nothing will change. Shame.

  9. I’m booked in business class on the 1 hour 25 minute flight from Bangkok to Phuket in February on a B747. What can I expect?

  10. I recently purchased a 4 sector business class ticket. I was put on Thai Smile for the first sector and the last sector was seated in row 60 of a full flight.
    Airline refuses to compensate me although I paid full business class fare.
    Not building loyalty for sure.

  11. @Stuart: Are you really that paranoid to think that Gary would give the email addresses of people commenting here immediately to the Thai authorities? You won’t be in any danger by saying that the current king has probably a soft spot for the airline as quite a few of his wifes and “royal consorts” were previously employed there as FAs.

  12. Almost 6 years ago, I had bunch of Thai flights that I had to cancel due to a sudden health emergency. They canceled and refunded all the flights. Even the non-refundables. But, I did have a single flight booked on Orbitz, that was non-refundable. I knew that one was a goner. But, the same agent from Thai, called me back and got that refunded from Orbitz. I was really impressed that Thai did all this, and I had never, ever flown Thai. It is a shame that customer service experience is probably gone. Maybe the new King will have a change of heart and re-invigorate Thai Airways.

  13. I work in this company for more than 25 years . The legal department ( WL) spend over 1290 billion per year .
    Hiring judge ,advocates as advisor 56 of them ( after winning cases from employees) with high salaries…

  14. >I’m booked in business class on the 1 hour 25 minute flight from Bangkok to Phuket in February on a B747. What can I expect?

    @George W Hardy
    I do the same trip last November and I got a seat with my partner in the mini cabin of the 747.
    Service was excellent and the almost lie flat seat was perfect for such a short flight. Food was good too (breakfast, Seafood congee).
    If I still fly the same destination, I will book the same again.

  15. I’m flying Thai to Bangkok in the New Year only because Emirates stopped doing the Sydney BKK Sydney route last June. Comparing Emirates Business class service and flights to Thai is like chalk and cheese.
    Emirates Limmo’s to and from airport, the A380 Bar, the variety of food and drinks in their Lounges….
    Still, flying with Thai soon, I should look on the bright side, I’ll arrive in BKK from Sydney late afternoon which is good.

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