Thai Airways is blaming lower-than-expected revenue on a drop in Chinese tourism, further exacerbated by Chinese trade tensions with the United States.
The argument goes like this:
- In the first quarter, the number of Chinese tourists in Thailand has decreased by 1.7% (compared to the same period last year), threatening Thai Airways’ revenue goals for 2019
- China and the USA are experiencing trade tensions
- Therefore, the drop in tourism is due to uncertainty over a potential trade
Perhaps you can detect a degree of skepticism. Certainly the trade skirmish with the USA may potentially explain the drop in air traffic, but maybe its just growing competition and a rapidly-developing luxury travel market within China? Or budget carriers attracting Chinese tourists to Kuala Lumpur, Singapore, or Ho Chi Minh City instead? And Thailand remains the top tourist destination for Chinese travelers. Wouldn’t a trade war with the USA deter some from visiting the USA who would instead choose…Thailand?
When pressed for more info, the airline simply offered boilerplate verbiage:
Thai has to evolve and adapt to a dynamic market place. It has to continuously review its costs, business plans, risk management on the fuel price, and currency volatility.
Yes, that’s hardly insightful.
Thai continues to wrestle with its very foundation. Embrace the full service model or try to emulate the low-service competition? Both paths are fraught with peril in the highly-competitive Southeast Asian market.
Goal = Ancillary Revenue
In a statmeent to the Bangkok Post, Thai added:
We must think out of the box to find new ways of increasing revenue as well as be more efficient and effective by redesigning work processes for a better future.
Thai is focused on raising ancillary revenue. As it seeks to return to profitability by year end, the carrier is moving forward with plans to lease or acquire 23 new aircraft. But new aircraft alone won’t solve the revenue issue. I doubt baggage fees or buy-on-board meals will help much either. Thai Airways’ problems are much more structural and no one appears to have the will or the political capital to make the sort of painful personnel cuts that might put the carrier back on the road to financial health.
Maybe it is trade tensions with the USA that are causing a drop in Chinese passengers to Thailand. I tend to suspect not. But in either case, Thai must position itself to adjust to the changing world around it. Speaking purely as an outside observer and semi-regular passenger, for far too long Thai has been stuck in the rut of status quo.
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Thai is a basket case, has been for years. This decline has ZERO to do with inbound Chinese ( they were coming on tickets with wafer-thin markets). It has everything to do with the utter incompetence of the management of the airline: from fleet management to destination planning to scheduling/pricing.
Thai is effectively bankrupt and only survives- Alitalia-style- thanks to government guarantees/support. It will continue to bleed cash ( just as it will no doubt continue to cater for the freeloading ‘hiso’ Mob who have been sucking it dry for decades).
So far the only ‘turnaround’ strategy seen is a massive devaluation of the frequent flyer program, prompting many long term ROP members to walk away.
Thai decline has, I think, more to do with poor service, planes that are way out of date in the premium cabins – 744 in business class anyone on major routes like BKK-SYD, service cut backs – one flight a day on BKK-SYD that doesn’t connect well with services from Europe. Then there are the uncompetitive fares, inconsistent premium cabins on new aircraft – A350/789/788 all delivered in recent years with only the A350, used on secondary routes having a good product.
Then there’s the soft product….
Then there’s service recovery….
And the list goes on.
Problems are not tackled at Thai. With the cost base it has it should be one of the most competitive airlines in Asia and its hub is a cross roads but Thai is a failure.
Thai is overpricing its tickets, sometimes by a magnitude of 2. One wonders if anyone does something like competitors price analysis. Or simply clicking a bit around on Google flights will reveal it.
Garuda is doing the same, pricing itself out of the market.
The reason chinese tourist arrivals have dropped is because of the accident in Phuket last year. As chinese tourist travel in troops, the troups are now heading elsewhere and impact is felt also by the hospitality industry.
TG always has an excuse.
The truth is, it’s one of the worst managed airlines in the world. Its problems cover the entire spectrum, from inefficient aircraft to irrational ticket pricing (and of course, lots of corruption).
In my opnion its more to do with fact thats its a Government owned Airline and keeps giving away free flights to government officals and increased its prices to compensate the loss in income for the free flights expecting the flying public to pay for it.
Combine this with old aircraft and a cut back in services so much that people have other airline options to use.
Thai Airways was once a renound world class airline but its slipped away
Thai’s incompetent government appointed management will grasp at any excuse
They probably just go on Google news prior to any results announcement