After the latest fiscal quarter, Thai Airways has much more to wrestle with than unhappy pilots who delay flights when they are denied a first class seat. But it is all connected.
Thai Airways just suffered a particularly bad third quarter. The airline reported a quarterly loss of 3.69 billion baht ($111,548,700). That’s just for the third quarter and 103% higher than the same period last year.
Oh, but revenues were up 2.2% points out Thai Airways President Sumeth Damrongchaitham. Damrongchaitham blamed rising fuel costs and lower demand during Thai’s traditional low season as the reason for the higher loss than expected. It appears that Chinese demand has particularly weakened. Overall, costs were up 11.3% including a 5.5% rise in non-fuel related costs for maintainence.
Thai Airways also blamed the following:
- Typhoon Jebi (Japan)
- Earthquake in Hokkaido (Japan)
- Typhoon Mangkhut (Hong Kong)
Japan and Hong Kong are key routes for Thai Airways.
The Deeper Problem
Now that I’ve summarized the financials, let’s get to the heart of the issue. It’s more than just spending exceeding revenue. Indeed, the problem Thai faces is directly related to the recent fight amongst employees over a first class seat.
Why are people booking away from Thai? One reason is high prices for an inferior product. Thai’s business class seat is deplorable on many routes and yet the carrier often charges more than it rivals. The airline also has older, inefficient aircraft and labor contracts that are no longer regionally competitive. Stories of graft and nepotism abound. Accountability is dependent upon who you know, not clear and transparent rules.
It is not surprising that all that leads to losses.
What is Thai’s solution? It may be too late. I am not even hinting the flag carrier of Thailand would ever shutdown. It won’t. But I don’t see an end to losing money year after year. Thai hopes to be profitable by 2022, but will need to do a lot more than blame the weather and Chinese tourists to return to profits.
image: Chihaya Sta / Wikimedia Commons