Thai Airways International Ordered To Further Slash Costs

Thailand’s government wants national carrier to further reduce its costs in a bid to find its way back to profitability. Transport Minister Arkhom Termpittayapaisith declared last week that executive perks need to be further slashed among other measures to generate more income and benefits.

Thailand national carrier’s finances remains critical as its restructuring plan managed only to reduce costs by THB2 billion (US$55 million) instead of THB10 billion (US$280 million).

Last Wednesday, Thai Airways President Charamporn Jotikasthira talked with media at the Foreign Correspondents Club and vowed to cut costs by 20% until the end of 2016 with a return to high profits planned in 2017. The fleet has already been reduced from 135 to 94 aircraft while the carrier operates only 8 different models of aircraft, compared to 11 a few years ago.

ASEAN TRAVEL THAI COST CUTTING 20 percent Nov 2015

However, Thai Airways still did not cut on its stf, which remains at the same level than prior to its restructuring. They are now talks to retrench some 2,000 employees. Essential will be the restructuring of the management, which is inflationary and considered as not very productive.

Many routes have already been suspended or transferred to its lower cost subsidiary Thai Smile. The carrier will have also to rethink its hub strategy as it lost market shares to competition- particularly to Middle East carriers.

During his presentation to the FCC, Mr. Jotikasthira said to look at reintroducing one-stop direct services such as Frankfurt-Bali with a stop-over in Bangkok. According to Thai Airways President, such services could generate more revenues. The carrier will look at reinforcing its transfer services particularly from Europe to Southeast Asia, Japan and Australia.