Deputy Transport Minister Pailin Chuchottaworn has urged Thai Airways International Plc (THAI) to procure smaller aircraft to decrease operation and maintenance costs for some of the national carrier's routes, in a bid to decrease its large debt and keep up with emerging low-cost airlines.
The deputy minister commented on the airline's financial state after his scheduled policy-giving visit to THAI's headquarters yesterday, as part of a government initiative to decrease the huge debt levels at seven state enterprises.
Rehabilitation plans for transport-affiliated state enterprises include THAI, the Bangkok Mass Transit Authority (BMTA), which operates Bangkok's public buses, and the State Railway of Thailand (SRT), which operates the country's provincial trains.
The three authorities have an estimated combined debt of 200 billion baht.
According Mr Pailin, THAI will have to "figure out" how to lower its overall fixed costs in order to succeed with its corporate rehabilitation plans to decrease its accumulated debt.
He urged the airline to conduct research into how some low-cost airlines are able to offer full service at cheaper prices and comparatively lower fixed costs. He also instructed THAI to deal with its discharged aircraft, which are awaiting procurement by other airlines.
Transport Ministry reports state that for this year, THAI plans to procure 28 more planes to compensate for its discharged aircraft. According to the report, 19 will be used by the national carrier, while the remaining nine will be used by its low-cost subsidiary airline, Thai Smile Air.
"Plans for the new planes awaiting procurement should also be reviewed, especially if the type and size of the aircraft are suitable for the routes [they were procured for]," Mr Pailin said. "The carrier must also observe whether its direct competitors are leasing their planes or purchasing them."
Meanwhile, the State Enterprise Policy Office, also known as the superboard, rejected rehabilitation plans submitted by THAI and the BMTA last week. According to its chief Ekniti Nitithanprapas, the national carrier has failed to meet its revenue target despite servicing more passengers than its main competitors.
Mr Ekniti last Friday instructed THAI to draw up long-term plans that better reflect competition in the market, adding Thai Smile should also be included.
The BMTA's rehabilitation plans, submitted last week, included a proposal to introduce a 2-baht fare hike for all of its buses.
Mr Ekniti said the authority's plans must first include how the bus services and new routes will supplement or connect with other mass-transit systems.
BMTA deputy director for bus operations Prayoon Choygeo said last Friday any possible price hikes would "surely not happen anytime soon".
Prime Minister Prayut Chan-o-cha has also approved the SRT's rehabilitation plan to set up a subsidiary to manage its assets and reduce debt.