Airline News
THAI fails to meet cost targets as losses widen
August 17th 2015
Thai Airways International (THAI) has failed to significantly reduce costs as part of its rehabilitation, the carrier’s chief executive, Charamporn Jotikasthira, told the Bangkok Post last week. The airline managed to reduce expenses by 8.8% in the past six months, missing its target of 20% by a wide margin. Read More » THAI’s board will vote on a plan in September for the sale of 30 properties; 19 overseas and 11 local office and staff residence buildings. THAI has committed to cutting its workforce by 1,400 before year-end as part of its Mutual Separation Plan (MSP) and implement a similar Golden Handshake program for cabin crew to manage job positions affected by flight and route adjustments.
THAI last Thursday reported a second-quarter loss of 12.8 billion baht ($378 million), widened from a loss of 7.7 billion in the year-ago quarter. THAI’s passenger numbers were up 11.2% in the quarter, outstripping a 2% capacity increase. While load factor rose 5.8%, to 69.2%, THAI’s yield dropped sharply by 11.4%. THAI’s cargo business suffered during the three months, with volumes down 23% year-on-year, and load factor dropping 10%, to 58.3%.
''We have to ramp up our competitiveness by developing a new network management system, to improve the cost-effectiveness of using aircraft,'' Charamporn said. The THAI president hoped to raise revenues by approximately eight billion baht a year using an improved revenue management system. Also, he is considering the introduction of a network management system to enhance THAI’s flight schedules and aircraft deployment.
Thailand’s and THAI’s adherence to global safety standards are still under close global scrutiny. Several foreign aviation regulators, including Indonesia’s Directorate General of Civil Aviation (DGCA) and the European Aviation Safety Agency (EASA), have contacted the flag carrier requesting audits, Charamporn said. The DGCA will still visit Thailand this month with the EASA visit scheduled for November.
Scrutiny of THAI flights increased after the International Civil Aviation Organisation (ICAO) gave Thailand a red flag on June 18. This was in response to the Department of Civil Aviation (DCA)'s failure to meet a 90-day deadline to correct shortcomings identified earlier by ICAO, in particular its failure to meet aviation safety standards. The department regulates aviation businesses and approves of air operator certificates. "The level of scrutiny has increased by four times from the period before ICAO red-flagged Thailand," said Charamporn.
The U.S. Federal Aviation Administration (FAA) has given Thailand 65 days to fix the deficiencies identified in a July audit of the DCA. Among them was a shortage of qualified DCA staff to conduct air safety inspections of airlines, a concern also raised by ICAO.
In other news, THAI has reversed its strategy for the four times a week Bangkok-Rome B747-400 route. Scheduled to be cancelled from October, the carrier said it will retain the service until February 1.
