THAI To Undergo Rehab

25th Jul 2014

The growing competition at home and in the region has prompted the Thai Airways to plot a rehabilitation plan to enable itself to extend its life.

Part of the program is the early retirement option it offers to some 900 employees.

To save on operational costs, the airline is planning to uproot its lower-cost subsidiary, Thai Smile, from Suvranabhumi International Airport to the older Don Mueang International Airport, which is designated as Bangkok's low-cost airport.

The transfer of Thai Smile's base of operations to Don Mueang is projected to give the subsidiary an opportunity to attract more passengers while cutting on costs. The troubled airline is expecting to be profitable again by 2017.

Nok Air, another wholly-owned low-cost subsidiary of Thai Airways, has its hub at Don Mueang, making the two subsidiaries directly competing for customers. The mother unit, however, has already advised Nok Air to give up some of its existing routes to its sister airline.

The Thai Airways International group has lost much of its market to the rapidly-growing Thai AirAsia, the Thai subsidiary of the behemoth AirAsia Bhd. of Malaysia.

When sought for comments, Nok Air CEO, Patee Sarasin, doubt THAI's decision as right and practical. He argued that it will do more harm than good because it will affect the airline's flight connectivity issue with its subsidiaries. If that happens, the flag carrier will lose more customers. He concluded that the board might not approve the proposed transfer of Thai Smile's base of operation.

The early retirement program is also a cost-cutting measure proposed by the airline. The program will affect mostly to employees whose positions are no longer crucial to its overall operations and those who have health issues.

The airline has already submitted its rehabilitation plan to the Finance Ministry for scrutiny by the National Council for Peace and Order.

THAI is expecting to cut down operating costs by as much as THB4 billion on the first quarter of 2015, while increasing its revenue to as much as THB4 billion as well.

Last year, the flag carrier registered a loss of over THB12 billion and continued its losing streak during the first quarter of this year.

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