Thai Airways has new management, but will it solve its woes?
In 1997, Thai Airways was among the five founding airlines of the Star Alliance, along Air Canada (ADH2) , United Airlines, Lufthansa (LHAB) (LHA) and SAS. But the last decade was tough for the 58-year airline, and it is up to newly appointed president, Sumeth Damrongchaitham, to turn the airline back into the profitable business it was at the turn of the century. However, there is more than one challenge in this quest.
After 40 years of profit, Thai Airways recorded a loss for the first time in 2008. Like many others, the airline was affected by a spike in fuel prices, but Thai’s situation was also worsen by a political situation in the country. In November of that year, tens of thousands of armed monarchist supporters of the Democratic People's Alliance (PAD) occupied both Bangkok airports - Suvarnabhumi Airport (BKK), and Don Mueang International Airport (DMK) - asking for the resignation of the prime minister of the time. Both airports were officially closed, stranding several thousands of passengers.
Since then, the country has been alternating between chaotic democracy and military coup. And Thai Airways, state-owned at 51%, suffered from this instability.
In October 2009, Piyasvasti Amranand was called to turn around the airline. He successfully created a subsidiary airline, Thai Smile, aimed at competing with other low cost airlines, and started a fuel-hedging fund to cope with oil prices. However, in 2012, soon after a democratic government was elected, the president was suddenly sacked, without much of an explanation. This year was the first one when Thai Airways saw profit since 2008.
In 2015, the International Civil Aviation Organization (ICAO) and the Federal Aviation Administration (FAA) both downgraded Thailand airlines’ safety rating, with the latter putting the country in Category 2. From that point, no new routes to the United States could be created. The European Aviation Safety Agency (EASA), however, did not sanction the country, allowing Thai Airways to start new routes towards Europe, starting from Vienna in 2017. ICAO eventually recertified Thai Airways to international standards.
Today, the flag carrier is losing the ground on domestic and intracontinental flights. In May 2018, Thai Airways announced it would stop Bangkok-Samui route. In June 2018, it reduced the frequency of flights towards Phnom Penh, Cambodia. All to the benefit of other carriers such as Bangkok Airways, JC International Airlines and… Thai Smile.
Since 2014, the low-cost subsidiary has been operating with an independent license, a move which has been, according to sources within the airline quoted by Reuters, disrupting the connectivity between the two airlines, and creating tension. Thus, former senior vice-president Jothin Pamon-Montri believes that Sumeth’s priority should be to reintegrate Thai Smile into its parent company.
Another challenge will be to reorganize Thai Airways fleet. Influenced by successive governments, the airline management placed small orders for all types of Boeing and Airbus aircraft. As a result, the current fleet of the airline is made of 10 different models and marked by heavy operational costs. However, Sumeth might have already taken this matter into his own hands. On September 14, 2018, local media The Nation reported that the previous fleet expansion plan is scrapped.
Thai Airways CEO resigns after rehabilitation plan approved
Thai Airways CEO resigns a day after the Central Bankruptcy Court of Thailand approved the airline’s rehabilitatio...
Court approves Thai Airways rehabilitation plan: what’s next?
The Central Bankruptcy Court gave the final approval for Thai Airways’ rehabilitation plan to move further. What i...
Stobart Air enters liquidation after potential buyout fails
Stobart Air entered a liquidation process after a potential buyout by Isle of Man-based company Ettyl fell thr...