THAI vows to cut costs with fewer planes
THAI Airways president Charamporn Jotikasthira has vowed the national carrier will cut 20% of its non-fuel charges by the end of 2016 to begin generating profits.
Speaking at the Foreign Correspondents' Club of Thailand on Wednesday night, Mr Charamporn said cuts would be made to expenses such as maintenance, aircraft, salary and on-board service costs, which amounted to 180 billion baht in 2014. The measure is a part a package of 21 measures devised by THAI to thwart financial losses.
"If we can reduce those costs, we will easily make a profit," he said, adding the carrier has reduced its aircraft from 135 to 94, and the different types of aircraft operated have been cut from 11 to eight, which will lower maintenance costs -- a major contributor to losses.
Eventually, the carrier will have only four or five models, he added. The national flag carrier will also suspend its flights to destinations such as Los Angeles, Madrid and Johannesburg, he said.
"But this will take time to do," he warned, saying THAI is acting as fast as it can to do away with expendable costs by the end of this year to move forward with its financial rehabilitation plan in 2016.
The cabinet has also ordered THAI to submit a plan to restructure the organisation, as the current employee management is inefficient. Expenses -- such as payouts for the abrupt ending of employee contracts -- as well as early-retirement payments, will also have to disappear, according to the airline president.
THAI needs to work to regain its status as a transport hub in Asia, he said. In the past, Thailand -- along with Singapore and Hong Kong -- was a transit stop for passengers travelling from Europe to Indonesia, Australia or Japan. But with the rise of Middle-Eastern carriers, the air traffic routes have shifted, according to Mr Charamporn.
"Now, a lot of airplanes are simply flying over our heads. Passenger travel from Europe to Dubai or Abu Dhabi, then go to Sydney," he said.
THAI also operates non-stop flights, which are less efficient. One-stop flights would significantly increase revenue, he added.
The cost-slashing measures and increased revenue would allow THAI to compete with Middle Eastern carriers to offer lower fares, according to Mr Charamporn.