For Thai Airways, the path is clear: reform or die. That’s at least the warning from senior leadership to employees. And while recent actions suggest this is not merely a bluff, Thai still lacks a vision for moving forward.
Earlier this week, I wrote about how Thai plans to transfer six routes in Southeast Asia from mainline to Thai Smiles, its low-cost subsidiary. In speaking about these changes, Thai Airways’ President Sumeth Damrongchaitham admitted that his carrier had no true strategy for moving into 2020.
Thai needs to adjust our strategies too to preserve our reservation rate. We will focus on rolling out promotional campaigns until year end. However, next year’s strategy remains to be seen. Our prices this year have been reduced to a record low and if this strategy doesn’t work, we may take a different direction, such as seeking more partners for organization tickets, increasing online channels, or giving privileges to frequent fliers.
Such vague generalities have been floated for years…and have not worked. It is painfully clear: Thai does not have a strategy for moving forward. But as the losses mount, even another government bailout will likely require at least the appearance of change.
> Read More: Thai Airways Cancels Six Routes, Concedes Lack Of Vision
The Warning
Perhaps that is why Damrongchaitham was so blunt in his latest warnings, issued on Tuesday:
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.
Even if such dire warnings are successful in uniting workers behind a common cause, what is the road map? How can “obstacles” like fierce competition actually be overcome?
Damrongchaitham continued:
The competition is very fierce this year. Thai is really in a crisis. Next year it must do its best. If staff are still unaware and do nothing, they will not have enough time to fight back. Today very little time remains. Today there is no comfort zone. Everyone will die if the vessel sinks.
Everyone will die if the vessel sinks? Wow…that’s tough medicine. Damrongchaitham went on to warn there would be no bonuses this year and that the only bonus would be “the survival of the company.”
No kidding…
But what’s the plan? That is still missing from the conversation.
A Bluff?
Despite an accumulated loss of 280 billion Baht (9.2 billion USD), it is still difficult to think that the Thai government would stop propping up the flag carrier. 20,000 jobs are a stake not to mention national prestige and a primary artery of tourism.
For that reason, Thai may continue to groan on, but the latest warnings must reflect pressure from the government to reform and at least stop the bleeding of red ink.
As an outside analyst having watched Thai Airways for years, I put it in the same category as Air India, Alitalia, and South African Airways. No matter how much it loses, it always manages to hang on. While past action does not necessarily indicate future action, part of this feels like great pageantry of illusion concealing an airline and government that is unwilling to actually change.
CONCLUSION
The warnings by the Thai Airways President are the most serious I have ever reported on. It’s safe to assume that Thai Airways is broken and under tremendous pressure to reform. But whether there is the will to ultimately do so or liquidate still seems too far-fetched.
But first things first. Without a clearly-defined strategy, calls to “overcome the obstacles” simply ring hollow.
It would help if Thai could price its Business Class correctly. It is not uncommon to see Thai prices at about 2x SQ price levels. Correct pricing would likely help selling the seats.
Btw the same applies to Garuda; they are also totally lost on their BC pricing.
I totally agree, their pricing is in crazy territory.
The other place they have done themselves no favours is by reducing services on key routes to Australia and then making the connections with services from Europe far too long. Add in then the 744 still serving SYD and they are the most unattractive option available from London but often too the most expensive. Why they aren’t utilising their A350s to SYD and instead using them on mid and short haul services in Asia is an absolute mystery.
Yes, agree.
But they have to be kidding about enhancements for ROP FFP: they just presided over a massive devaluation of it. Do they think travelers just hang around waiting to be beckoned back at the whim or fancy of TG?
And in any case how do they know what’s led to the downturn in business? Have they ever surveyed members? ( not in my 1971-2018 experience)
I’m about to undertake the final trip of my TG points; haven’t taken a paid flight for a year; no forward bookings. Would they know, do they care? Frankly it’s a shambolic basket case. If I were running the business, sure as hell I’d want to know why a 50 year customer suddenly stopped buying .
Thai should start selling or decommissioning the older less frugal planes and standardise its fleet to just a few type of aircraft. They have too many variants in their fleet.
Hope they don’t go bust I’m flying with then in jan
Me too, getting quite worried about this.
Totally ahree with Paolo and others. We used to be regular isers of Thai both regionally and to/from UK but thanks to 3 bad fligjts(rude unhelpful staff on groumd and cabin) coupled with uncompetative fares we left never ever to return. Did Thai take any notice..even when I took the time to let them lnow?? Nope..they gave the impression that couldnt care less about losing loyal customers let alone do anything about it. We have used BA and EVA for long haul since and Air Asia and Bangkok Airways for regional. Eva business is reasonal and good standard. Cabin crews efficient but but a bit robotic. BA business seats aeful but cabin crews always been great. BA always great at respondong on rare occasion when I havejad to contact them..and responsove to suggestions. Thai totally utterly unresponsive to suggestions
Finally a place where Scott Kirby would actually do some good rather than damage. Sadly, Thai needs a soulless bean counter in charge for a while, and he certainly qualifies. Half joking suggestions aside, Thai really could use someone to install efficiency into the system. The real question is whether the political will is there to allow needed changes to be made.
Thai Air is much like Air Italy, I can’t see the government letting it shut down no matter how things get.
One way or another the Thai taxpayers ( ie middle class, certainly not the rich who tend not to pay ANY) will foot the bill. In the event it’s fully privatised, expect it to be a windfall ( with debt write offs) for one or more of the mega rich families ( and Chinese partners)
Aaron, you mean Alitalia? I think there is risk we will see Air Italy shut down.
So basically it all depends on the employees?
No responsibility from the top?
Any guide? You know, something.
This is a joke.
I wish it was. You are right. Sadly this is the reality.
I have been flying with TG for the past 28 years on Business Class. The pricing on Thai Airways ticket since 3 years ago was just crazy at times and most of their older aircraft J Class seat was not in good maintenance conditions. The new design on the Airbus for J Class was totally a safety hazard especially on the serving board where there was a big connecting bolt protruding out from wall of the front passenger back panel. I have travelled many times back and forth from Singapore and sadly, TG has given me an impression that they do not have their own home ground, every time after landing, passengers need to walk a long distance before getting into the immigration counter. They need ro get the right man to do the right job.
flight prices from Bangkok to Europe are not competitive any more and in business class even more so.
They used to be very obliging re using frequent flyer points but sadly not so any longer.
I havd flown with them for 20 years but thinking maybe I will have to look at alternatives like Finnair.