Paul Lewis/BANGKOK
AFTER 36 YEARS of operation, Thai Airways International is facing a massive mid-life shake-up in a bid to rejuvenate an operation which has been showing its age.
For many years, Thai was Asia's fastest-growing flag carrier, boasting the region's first all-jet-powered aircraft fleet by 1965 and a reputation for service unmatched in the Far East. By the early 1990s, however, Thai's "smooth-as-silk" image was beginning to look a little wrinkled as it began to experience a slow decline.
FALL FROM GRACE
Many explanations have been advanced for Thai's fall from grace. Chief among them has been the rise in competition from within and outside the region. Critics also point to the effects of widespread corruption and nepotism within Thai, resulting from years of Government and air force interference.
With the looming threat of a second national airline being established, Thai now appears to be determined to stop the rot and has launched a comprehensive overhaul aimed at again making it a "first-choice" carrier. "We must recognise that, to be first choice, we must be prepared to undertake far-reaching changes in our approach. We need to work not just harder, but smarter," says Thai president Thamnoon Wanglee.
On the recommendation of consultancy Booz Allen & Hamilton, Thai has drawn up a "re-engineering" programme and enacted 43 major initiatives, ranging from improved customer service, enhanced staff productivity, better resource planning, optimised fleet utilisation and a reduction in Thai's 460 million baht ($18 million) spare-parts stockpile.
As a state-run carrier, however, Thai's freedom to act is still limited, with local labour laws effectively preventing any retrenchment of its 22,000 strong workforce. The real solution, argues one senior Thai source, is for "-the Government to privatise the airline".
Plans to float up to 30% of Thai have been on ice since 1992, when an initial offering of 100,000 shares, or about 7% of the airline's stock was made to the public. There is no indication that the incumbent administration intends to restart this politically sensitive process in the near term.
Thamnoon instead prefers to talk about "virtual privatisation," involving a restructuring of selected airline divisions into subsidiary operations. This process will probably start with Thai's information-technology, cargo and maintenance businesses.
"We see some obstacles to privatising Thai as such. We're thinking about setting up Thai Airways International as a holding company, so that we can spin off our activities and privatise them to the public. That would be easier," suggests Thamnoon. Privatisation of Thai's subsidiaries would also open the door to foreign-airline participation, provided that it meets with Government approval. Thai is in the process of cementing a global alliance with partners United Airlines and Lufthansa, none of which rules out equity swapping as a long-term goal. The immediate priority of the newly formed Alliance Board is to strengthen the co-operation between the three carriers in the areas of codesharing, joint sales and marketing, common user equipment, cost savings and fleet integration. "This is a long process we have just started," says United vice-president Don Curran.
Following the signing of a new air-services agreement between Thailand and the USA earlier in the year, Thai and United hope to have a new codesharing network in place by October.
Commercial senior vice-president Bhisit Kuslasayanon says that Thai is seeking onward connections from Los Angeles to Atlanta, Chicago, Dallas, San Francisco and Seattle.
At the same time, Thai is working with Lufthansa to expand existing codesharing services beyond Germany. Plans include using Lufthansa codesharing flights from Frankfurt, to give Thai daily access to Amsterdam and replace its direct service to Brussels. It is also targeting joint services to Vienna, in Austria, and Eastern Europe.
Bhisit adds that Thai is hoping to gain wider access to Australia through a planned codesharing deal with Ansett, as soon as a new air-services agreement is negotiated with Canberra. Other new growth areas being looked at are Africa and South America, with tie-ups being discussed with South African Airways and Brazil's Varig.
Much of Thai's future planning rests on a five-year fleet-modernisation programme now in the process of final Government approval. The 143 billion baht re-equipment drive calls for a rationalisation of Thai's fleet, from 14 different aircraft types to just six basic models, together with a corresponding reduction in engine types, from 11 to six.
NEW AIRCRAFT
A total of 21 new aircraft is due for delivery, starting in September 1997 with the first of five new Airbus A300-600Rs, followed by four Airbus A330-300s, two more Boeing 747-400s, six Boeing 777-300s and four Boeing 737-400/500s. Some 31 aircraft are being disposed of, including Thai's remaining seven A300B4s, eight 747-200/300s and three McDonnell Douglas DC-10-30ERs.
In conjunction with the introduction of the new fleet, Thai has unveiled plans for a $50 million package to spruce up its corporate image, including new business-class seating and the introduction of in-flight entertainment systems and a fresh corporate image.
Source: Flight International
