Facing relentless competition and pressure to move from loss to profit, Thai Airways will retreat from six routes in Southeast Asia.
Thai Airways will suspend service from Bangkok (BKK) to the following six cities:
- Vientiane (Laos)
- Luang Prabang (Laos)
- Phnom Penh (Cambodia)
- Hanoi (Vietnam)
- Ho Chi Minh (Vietnam)
- Yangon (Burma)
Thai Smiles, Thai’s low-cost subsidiary, will pick-up these routes. More on that below.
Sumeth Damrongchaitham, president of Thai Airways, citied low demand as the driver of this change:
These routes are all covered by a small number of flights and have low customer capacity. Once the cancellation plan is finalized, Thai will assign Thai Smile Airways to cover these routes instead.
Thai’s (Lack of) Strategy In 2020
Thai needs to adjust our strategies too to preserve our reservation rate. We will focus on rolling out promotional campaigns until year end. However, next year’s strategy remains to be seen. Our prices this year have been reduced to a record low and if this strategy doesn’t work, we may take a different direction, such as seeking more partners for organization tickets, increasing online channels, or giving privileges to frequent fliers.
That is a damning admission of Thai’s utter lack of direction. That’s problematic for two reasons.
First, Thai historically has lost money on longhaul routes and recouped some of that loss on shorthaul routes. While midhaul “goldilocks” routes to Japan and China may be its most profitable, regional connections are essential to selling seats on longhaul flights. It is also part of being a network carrier. Thai’s shorthaul deduction will further hurt its longhaul load factors and bread-and-butter midhaul routes.
Second, Thai Smiles doss not have a real business class. Its “Smile Plus” class is simply a blocked middle seat plus business class meal, similar to the business class model of European airlines on shorthaul flights. While certainly better than a single-cabin aircraft, such a soft product downgrade may further weaken demand from business travelers otherwise willing to pay a slight premium to fly on Thai Airways.
As I’ve written about in the past, I feel bad for Thai Airways. It is a wonderful airline with wonderful employees. Tragically, it has been slow in responding to the boom in low-cost carriers in Southeast Asia and now finds itself at such a competitive disadvantage that it may never recover. With internal resistance to change and a largely outdated business class product, Thai needs a strategy and needs one fast.
> Read More: Thai Airways Admits, “We Need To Restructure To Survive”
> Read More: Thai Airways Fails To Innovate, Loses Big Again
image: Thai Airways