KEVIN O'TOOLE BANGKOK
Although redundancies remain politically taboo at Thai Airways International the state-owned carrier is finding more creative ways to slim down, including plans to spin off non-flying operations into separate business units. Enforced redundancies among the group's 25,000 staff have effectively stayed off-limits, even after the effects of 11 September began to reach Asia Pacific. "Whatever we do we cannot cut staff," says Tasnai Sudasna, chief commercial officer at Thai. However, the carrier aims to streamline the core airline with a strategy which would spin off its catering, cargo and ground services as independent businesses. Thai's Royal Orchid Holidays arm and Royal Orchid Plus loyalty programme, with 1.4 million members, are also being looked on as potential standalone units. There is even the concept of a Thai Airways restaurant business, with franchises in London and Paris.
A "mutual separation programme" for long-serving staff is in place, but the emphasis is on more creative ways to balance the twin needs to move staff from the core airline while maintaining Thai employment levels. "It could take time, maybe 18 months, to work out how many people we need," says Tasnai.
Meanwhile, with limited room to cut personnel costs, Thai has had to focus on pushing up crew productivity and keep aircraft in the air during the crisis. "We asked our crews to fly more. We knew that if we wanted to do something then now was the time to do it," says Tasnai. Initial frequency cuts to the USA, and temporary suspension to Oman and Pakistan were balanced by increased services elsewhere, in particular to China, but also to Europe and across the Asia Pacific region. Four new destinations have been added including Chengdu, Kuwait, Mumbai and Pusan.
At the same time, the carrier has pushed its reluctant state owners to allow fares to rise by an average 20% on the perennially loss-making domestic routes, and Thai aims to shed more of these to private carriers and start-ups.
Today, traffic is close to normal, compared with a collapse of up to 27% in the couple of months following the US terror attacks. In the December quarter, the first of Thai's financial year, the carrier even claims a modest profit of 1 billion baht ($23,000). Thai has also switched strategy towards selling more hubbing out of Bangkok rather than the lucrative direct flights on which it had concentrated in better times. Tasnai adds that a 30-40% cut in advertising budgets has left the carrier more reliant on price to generate business.
Further down the road, the move to Bangkok's new Suwannaphumi airport should open opportunities to upgrade service and efficiency, he argues, including bringing its fellow Star Alliance carriers under one roof. "We have suffered a little anxiety here and there, but it is now more or less certain that we will have the airport partially or fully completed in 2005," he says. "That's the time when Thai will need a significant effort."
Privatisation, however, looks little closer. "The government wants early privatisation - but you have to accept that to enter into the market now wouldn't be a good decision," says Tasnai. "In the long run I think that we will privatise, but it takes time."
Source: Airline Business
