For Thai Airways, the path is clear: reform or die. That’s at least the warning from senior leadership to employees. And while recent actions suggest this is not merely a bluff, Thai still lacks a vision for moving forward.
Earlier this week, I wrote about how Thai plans to transfer six routes in Southeast Asia from mainline to Thai Smiles, its low-cost subsidiary. In speaking about these changes, Thai Airways’ President Sumeth Damrongchaitham admitted that his carrier had no true strategy for moving into 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.
Such vague generalities have been floated for years…and have not worked. It is painfully clear: Thai does not have a strategy for moving forward. But as the losses mount, even another government bailout will likely require at least the appearance of change.
Perhaps that is why Damrongchaitham was so blunt in his latest warnings, issued on Tuesday:
Today I want staff to be united to overcome the obstacles. Otherwise, the national airline must close down. There is still time for a solution, but there is not much time.
Even if such dire warnings are successful in uniting workers behind a common cause, what is the road map? How can “obstacles” like fierce competition actually be overcome?
The competition is very fierce this year. Thai is really in a crisis. Next year it must do its best. If staff are still unaware and do nothing, they will not have enough time to fight back. Today very little time remains. Today there is no comfort zone. Everyone will die if the vessel sinks.
Everyone will die if the vessel sinks? Wow…that’s tough medicine. Damrongchaitham went on to warn there would be no bonuses this year and that the only bonus would be “the survival of the company.”
But what’s the plan? That is still missing from the conversation.
Despite an accumulated loss of 280 billion Baht (9.2 billion USD), it is still difficult to think that the Thai government would stop propping up the flag carrier. 20,000 jobs are a stake not to mention national prestige and a primary artery of tourism.
For that reason, Thai may continue to groan on, but the latest warnings must reflect pressure from the government to reform and at least stop the bleeding of red ink.
As an outside analyst having watched Thai Airways for years, I put it in the same category as Air India, Alitalia, and South African Airways. No matter how much it loses, it always manages to hang on. While past action does not necessarily indicate future action, part of this feels like great pageantry of illusion concealing an airline and government that is unwilling to actually change.
The warnings by the Thai Airways President are the most serious I have ever reported on. It’s safe to assume that Thai Airways is broken and under tremendous pressure to reform. But whether there is the will to ultimately do so or liquidate still seems too far-fetched.
But first things first. Without a clearly-defined strategy, calls to “overcome the obstacles” simply ring hollow.