Facing relentless competition and pressure to move from loss to profit, Thai Airways will retreat from six routes in Southeast Asia.
Thai Airways will suspend service from Bangkok (BKK) to the following six cities:
- Vientiane (Laos)
- Luang Prabang (Laos)
- Phnom Penh (Cambodia)
- Hanoi (Vietnam)
- Ho Chi Minh (Vietnam)
- Yangon (Burma)
Thai Smiles, Thai’s low-cost subsidiary, will pick-up these routes. More on that below.
Sumeth Damrongchaitham, president of Thai Airways, citied low demand as the driver of this change:
These routes are all covered by a small number of flights and have low customer capacity. Once the cancellation plan is finalized, Thai will assign Thai Smile Airways to cover these routes instead.
Thai’s (Lack of) Strategy In 2020
Damrongchaitham added:
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.
That is a damning admission of Thai’s utter lack of direction. That’s problematic for two reasons.
First, Thai historically has lost money on longhaul routes and recouped some of that loss on shorthaul routes. While midhaul “goldilocks” routes to Japan and China may be its most profitable, regional connections are essential to selling seats on longhaul flights. It is also part of being a network carrier. Thai’s shorthaul deduction will further hurt its longhaul load factors and bread-and-butter midhaul routes.
Second, Thai Smiles doss not have a real business class. Its “Smile Plus” class is simply a blocked middle seat plus business class meal, similar to the business class model of European airlines on shorthaul flights. While certainly better than a single-cabin aircraft, such a soft product downgrade may further weaken demand from business travelers otherwise willing to pay a slight premium to fly on Thai Airways.
CONCLUSION
As I’ve written about in the past, I feel bad for Thai Airways. It is a wonderful airline with wonderful employees. Tragically, it has been slow in responding to the boom in low-cost carriers in Southeast Asia and now finds itself at such a competitive disadvantage that it may never recover. With internal resistance to change and a largely outdated business class product, Thai needs a strategy and needs one fast.
> Read More: Thai Airways Admits, “We Need To Restructure To Survive”
> Read More: Thai Airways Fails To Innovate, Loses Big Again
image: Thai Airways
I know Luang Prabang, Yangon and Phnom Penh were already served by Smile. The others might have been too. Not sure why this is an announcement.
Well, based on your last post maybe Southwest can buy them. (Joking)
It WAS a wonderful airline; those days are long past. It started to believe its own publicity , including “ smooth as silk” and “land of smiles” ( and other BS); many of the employees became disenchanted…and that showed onboard as well as on the ground.
They emasculated the ROP FFP ( and it had been the only reason many foreigners had stayed semi-loyal, often prepared to pay a premium for Thai flights because the ROP program offered great benefits).
These changes are just tinkering around the edges: they do not significantly impact the bottom line.
The is ‘Alitalia in Asia ‘ but far, far worse. Clueless , directionless and going broke fast.
In the event the losses do become unsustainable, we’ll see one of the mega rich ‘families’ act as a white knight ( perhaps as a consortium) buy it at a fire sale/knockdown price and restructure. It has been seen before and will surprise no one ( although it should scare everyone)
We flew business class with Thai in July Sydney to Rome via Bangkok! Couldn’t believe that from Sydney they were still using the old 747 business class seats! You know the ones! They slope downwards and your feet touch the floor HOWEVER from Melbourne and Brisbane they have the more modern planes with the flatbeds! Sydney being the busiest of the three cities you would wonder why they have put the better planes from Sydney as a priority !!! We will not fly with Thai again until they change their long haul planes from Sydney.
Thai Airways should seek foreign expert advise online and from retired top marketing bosses to regain its form .
If only Rupert Hogg was available.
Honestly I don’t think any sane airlines will transfer flights to Hanoi and Ho Chi Minh City to its secondary subsidiary airline. While I can understand how Laos and Myanmar can be relatively leisure-focused, Hanoi and Ho Chi Minh City are important business destinations now. This move shows how Thai Airways really lacks the right leadership.
Agreed!
Thai’s problems go back decades, with its leadership paying over inflated prices for aircraft and engines in order to receive millions in kickbacks over the years from the manufacturers. It’s evident they have no fleet plan…why are they flying so many aircraft varieties with similar capacity. Makes no sense. A380 — why? A350 when you have 787’s…why? The best thing for Thai would be For a successful airline to buy it and fix it and get it out the hands of corrupt leadership.
It’s the same ‘institution ‘ making appointments to boards that expended a vast amount on the GT2000 ( totally fake explosive detector) about 20 years ago: ie, people either so despicable that they would put their own soldiers/police/security at risk, or so utterly incompetent that they did no due diligence/testing prior to purchase…in exchange for who knows what ( they’ve never been held to account..). It cost more than $20m US ( and they ended up in the trash).
Sad but TG Thai is a fleet rudderless ship.s with loyal crews and self-loading cargo (now dwindling in significant numbers) Head office is a malfunction junction in constant denial and industry situational awareness. And some tired hulls in the fleet keeping company with some orphan hulks that should have been quit ages ago A340’s still parked at Don Muang yesterday. Latest is a retraction/clarification of head office lecture on survival a face-saving exercise no doubt They do not even have a short RPT Service down to Utapao while allowing AirAsia & others to fill in albeit that airport is a service hub with up to 10 aircraft parked there each time I visit. Why not offset repositioning costs with some cheap promo cabin crew training flights? HISO perks are still eating away at profits