Thai Airways – a parallel with Malaysia Airlines

BANGKOK, Thailand - While the Malaysian government seems now ready to step in to save Malaysia national carrier Malaysia Airlines, which survival is at stake, a similar –but more discreet scenario-

Thai Airways – a parallel with Malaysia Airlines

BANGKOK, Thailand – While the Malaysian government seems now ready to step in to save Malaysia national carrier Malaysia Airlines, which survival is at stake, a similar –but more discreet scenario- is happening at another sick airline in Southeast Asia, Thai Airways International.

It was no surprise when Thailand Military Junta indicated a few weeks after seizing power that they would reign into the mess in which Thai Airways International has been plunged for at least one or two decades. Thai Airways has seen in the last decade six presidents and five different chairman, all cronies. Only Piyasvasti Amnarand, a former Energy Minister, was the unique competent head of the airline over the last decade. Following the resignation in early December of Sorajak Kasemsuvan, Thai Airways had only acting President. For now, Military men have put another military at the head of Thai Airways –going back to an old tradition. The last Board of Directors Meeting, held a few days ago, was the first public appearance of Air Chief Marshal Prajin Juntong, THAI’s Chairman of the Board of Directors.

Like for Malaysia Airlines, Thailand national carrier is confronted with increased competition on regional and increasingly intercontinental routes. But the carrier is also confronted with tensions within its own organization. The changes in management, the permanent political interference, the rampant cronyism in the airline with exorbitant privileges for employees –and particularly management and board of directors- are taking their toll on the airline’s financial performance. Talking to Reuters, ex-President Piyasvasti Amranand described the situation at Thai Airways as “a malicious cancer inside the body which needs to be cured from the inside.”

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Thai Airways continues to be overstaffed (25,000 employees, on average 10,000 more than on airlines of similar size). The renewal of its fleet has been slow. Next to the new Boeing 787 Dreamliner and the Airbus A380, Thai Airways International continues to fly 15 Boeing 747 and 5 Airbus A300. Some of the B747 are already 20 years old while the Airbus A300 are all 16 years old. And particularly fuel greedy… Thai Airways fleet average is 11.5 years, more than most of its competitors in Asia. However, no decision will be taken to rationalize the fleet before a new government is in place.

The Military have asked the Air Marshall to fix as quickly as possible the ailing carrier which has been affected by the political turmoil in Thailand. In May, despite reducing its capacity, the cabin load factors were down from 73.2% to 60.2% on regional routes and from 66.3% to 58.2% on international routes.

If the government is serious, it will mean drastic cuts and strong austerity measures to save the airline. Like reducing the network and transferring more flights to Thai Airways low cost subsidiary Thai Smile, which is now competing head to head on the same domestic routes. It will also mean to reduce the working force – some rumors talk about 5,000 departures; it will also need a strong and competent management which can think long term. So far, the only symbolic measure taken by the military regime has been to cancel all perks for the board of Directors. Certainly not enough as the airline is expecting to lose this year US$ 190 million after losing US$ 392million in 2013. This coming Friday, Air Chief Marshal Prajin Juntong will officially present its measures to save the carrier. Only one thing is sure for the time being: no Thai government – and particularly under military rule- will let Thai Airways International collapse.

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