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Executive Talk

New executive board chairman wants to change Thai Airways ethics

Luc Citrinot, eTN Staff Writer  Jul 07, 2009

Is Wallop Bhukkanasut the right man for Thai Airways International (THAI)? Khun Wallop left the airline at the end of 2006 as executive vice president of Marketing and Sales to go into retirement. I met him a year later in a Thai Airways lounge in Bangkok and we chatted together in private for a while. He then confessed that despite many voices asking him to come back, he was quite happy to enjoy his newly regained freedom.

This is what it was surprising to learn that he finally accepted to return as the chairman of the Executive Board. Asked why he finally accepted the offer to return, he said that the challenge was great and he felt excited about it.

Mr. Bhukkanasut is indeed an extremely capable person and possesses typical Thai personality: he is very outspoken and dares to tell what most Thai people would skip with a smile. His frankness would be seen as an asset in the Western world but most probably considered as a weakness in Thailand.

According to him, he was assured to have the freedom to take decisions in driving Thai Airways out of the deep crisis the airline it is currently embattling. " I told to the Board that I would resign immediately if I can't do what is necessary," he said.

Many ways of doing business will then have to be changed. Thai Airways is plagued with a long tradition of nepotism, which has translated into inflated costs and the largest number of staff of any airline in Southeast Asia. Thai Airways currently has 27,000 employees compared to 16,000 up to 19,000 employees for its biggest competitors Cathay Pacific, Malaysia Airlines or Singapore Airlines.

Laying-off people will certainly be difficult, but Mr. Bhukkanasut is committed to change work and business ethics. "We are responsible of the future of the company. And I do not think that doing business just for prestige reasons is the right way. Prestige does not necessarily feed you," he said eTN’s exclusive chat.

The airline has just reaffirmed a plan to save some Bht 10 billion (US$335 million). Thai Airways’ plan involves restructuring of the network, marketing and management cost control, reshaping Internet tools for online ticketing, delaying pay increases and bonuses, as well as better controlling privileges provided until today to staff, the Board of Directors or VIPs. Unions urged management last year to reduce privileges given to influential people, mostly politicians and their relatives and fellow colleagues.

According to Mr. Bhukkanasut, one of his first tasks was to talk to Nok Air, a low-cost airline in which Thai Airways holds 39 percent of the shares. "Nok Air has been for the early beginning a problem as we never found a way to cooperate efficiently together,” he said. “We must find new ways to look at Nok Air potential in the benefits of both of us.”

An agreement has finally been signed between both carriers in July. The deal agreed by Wallop Bhukkanasut and Nok chief executive Patee Sarasin looks for synergies between the two airlines and coordination in flights. It would start with domestic routes and maybe be later extended to regional routes in a deal similar to the one existing between Qantas and Jetstar. Both airlines would do joint promotion and utilize frequent flyers programs. Concrete steps could come out by October, according to Mr. Bhukkanasut, who was determined in June to withdraw Thai participation out of Nok Air if both airlines could not reach a modus vivendi.

More sensational news might still come regarding the purchase of Airbus A380. Thai Airways is supposed to acquire six of the European superjumbo with deliveries beginning 2011. "We are in the process to review our decision on the aircraft with a decision to be taken by September," Mr. Bhukkanasut said. According to him, the aircraft is not economically viable for Thai Airways network, especially at a purchasing cost of US$1.8 billion. The aircraft with over 500 seats should be deployed on European and Japanese routes such as Tokyo, Frankfurt, London or Paris.

Instead, Thai Airways would rather refurbish to latest technology standards its current fleet or/and purchase smaller aircraft for its long-haul operations. " Our fleet is on average 12 years old, but we could still fly for a while with those aircraft until our financial situation has consequently improved," Mr. Bhukkanasut added. The decision, however, is in the hands of the Thai government. It will be a good test to see if prestige still drives Thai Airways International's fate.

New executive board chairman wants to change Thai Airways ethics
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