According to the President of Star Alliance member airline Thai Airways, the Bangkok-based carrier is on the verge of shutting down if they don’t succeed quickly in a turnaround. The government has given the airline one month to come up with a new cost-cutting plan.
Thai Airways International (THAI) president Sumeth Damrongchaitham said on Tuesday that staff must cooperate with the airline’s rehabilitation efforts because it is in a crisis and faces possible closure.
…”Today I want staff to be united to overcome the obstacles. Otherwise, the national airline must close down. There is still time for a solution, but there is not much time,” Mr Sumeth said.
The carrier lost $211 million in the first half of 2019, bringing total losses to $9.2 billion. The country’s national airline has traditional been run as a cronyist enterprise, benefiting its stakeholders, but its business has been eroded by low cost competition.
Over the summer the airline’s President introduced a six point plan to crowd source cost cutting ideas; reduce food waste; make a ton of money flying to Sendai, Japan; collaborate with a local gas station cafe chain; and platitudes but it was (shockingly) insufficient.
Thai’s new plan is to “reduc[e] the salaries of managerial staff ” and follow “a zero inventory policy at its catering department” according to the carrier’s President. What’s more, “[t]here will be no other rewards for the staff, because the top prize is the survival of the company.”
I had such high hopes for the airline’s earlier plan to profit by selling frozen foods.
That, apparently, is working out about as well as United’s decision to gut its elite program in order to focus on its core cookbook business.
Glad I booked late November return from Asia on Cathay Pacific instead of Thai / Asiana.
Thai Airways represents one of the grossest examples of large scale elite rent seeking left in the world. It takes massive subsidies that come mostly from poor Thai people to fund fancy jobs and toys for the Thai military elites who get most of the direct financial benefits of TG, as well as pay for comfortable and convenient air links for rich Thais and richer North European tourists. It does this while crowding more efficient and privately funded competition that could provide better services who might better cater to Thais instead of subsidizing vacations for Germans and Scandinavians. Unfortunately this is just a bluff, but the world would be a better place if TG was shut down or privatized.
Thai has one of my favorite liveries so it would be sad if the airline were to go away but it wouldn’t be surprising either…
I have always thought the defunct and money losing direct JFK-BKK and LAXX-BKK routes might be a good deal for Thailand. Planeloads full of tourists that were going to drop a fortune in Thailand.
CIA World Factbook: “With a relatively well-developed infrastructure, a free-enterprise economy, and generally pro-investment policies, Thailand is highly dependent on international trade, with exports accounting for about two-thirds of GDP. Thailand’s exports include electronics, agricultural commodities, automobiles and parts, and processed foods.”
Question: Does Thai Airways, as the national airline, have an essential role in providing access to Thailand, supporting vital international trade?
@OtherJustSaying There is absolutely no reason to believe that but for this government/military enterprise we call Thai Airways, that Thailand would not have access to the world. In fact, the opposite is true, with many private companies (i.e., AirAsia) very anxious to serve Thailand and which are crowded out by the favoritism and protectionism in favor of TG. There was a time when Pan Am tried to convince the United States government that it should be the protected national carrier based upon these same arguments, and thankfully it was — barely — rejected in favor of (at that time limited) competition. TG is pure reverse Robin Hood, stealing from the poor to benefit the rich, and that’s why it continues to exist.
@Mak. I just posed the question. I was hoping other people answer it. Not going to debate it. However, you are right about cronyism at Thai Airways.
On another site, there is story boasting about the 5 great things in the Asian airline market. Great service aside OZ, KE, TG, and MH have all had their “bad” press moments.
I’m not qualified to answer it (either way), but I wonder how/if the strength of the Thai baht is playing into this?
Over the past 6 months or so, the Thai baht has seemingly continued to increased vs foreign currencies. I have read of a strong USD, but the USD has been taking a beating vs the baht (last October, it was around 33 THB to USD; now it is close to 30).
Besides diminished tourism, I wonder how the strong baht could impact Thai Air’s operations?
Nice shot at United at the end there Gary. Unfortunately, your comparison is ridiculous as United is highly profitable. Also, the changes in their Elite program basically just mirror the other majors. Way to show off your prejudices.
I totally agree with what Mak says as the second person comment on this list. I can now safely say the following , as I have no intention to travel again to Thailand after 15+ visits over 12 years, and that is the following: 1- Thailand , in spite of it being one of the top 3 countries to visit in world tourism rankings , it is one of the most crony, corrupt, and undemocratic countries. This also reflects in its national airline . It should be no wonder, that Thai Airways is loosing money year after year. Its mid to upper management and directors are bloated with cronyism and inefficient personnel , whereas cabin personnel struggle valiantly to try and maintain a reputation of their airline that has sadly declined and is headed for the grave yard of a once great reputation airline.
Sounds like their Thaied up with debt!
In today’s Bangkok Post, the president of Thai Airways says that his comments were misunderstood and the airline is not going to be shutting down. See the article here: https://www.bangkokpost.com/business/1778459/thai-airways-not-at-risk-of-shutting-down-says-airline-president
Won’t miss the mediocre business class service. Not even sure this will be missed in the *A portfolio as SQ and NH already provide overlap within Asia.
I do find amusing all the outrage over corruption in Thailand. For those who caredo you also boycott other corrupt countries including China, the Middle East and much of Africa and Latin America?
@Richard H – he should be taken seriously but not literally
I have few flights booked for December. Hope I will fly
..
Thai should take a leaf out of the American airlines songbooks and aggressively flog co-branded credit cards and have a decent FF program selling miles etc. Such schemes are the profit centers keeping many airlines afloat, especially in the US.
In as much as I don’t want to see a founding alliance member go bankrupt or lose a *A option in southeast Asia, I can’t help but wonder how management has really handled the business over the last few years. Surely they could’ve seen and had room to tackle the aggressive low-cost competition in the region?
I am scheduled to fly on Thai F in December. Hope I am not affected…
@MAK
I’m not disagreeing or agreeing with anything you are saying but I doubt most of these poor Thai’s have much use for air travel to begin with. Thai catering to the tourist market brings in a lot of money into the economy. Where are the poorer Thai’s going to fly to in the first place?
Thai Airways won’t collapse. Where else would the current king get his future wifes and mistresses (…err…royal consorts..)?
Otherwise I fully agree with Mak.
Of all my trips, my favorite first class lounge food and beverage offerings have been when flying TG first out of BKK.
The free full body massage in the Thai Airway’s First Class Lounge is kind of cool as well.
Woops. Booked them last night mdl-vte for Jan. Widebody between Bangkok and Vientiane was a head scratcher but I get it now. Fffffff
Gary Leff just can’t write an article without making a snide comment about United. Give it a rest. You sound like a broken record.