2018 was an interesting year in the airline industry. We saw a temporary spike in oil prices, and have also continued to see strong global competition among airlines. However, different airlines have coped with this in different ways.
For example, Cathay Pacific is an example of an airline that had a rough couple of years, but 2018 was the year where they became profitable again.
Unfortunately that wasn’t the case for all airlines, though.
Thai Airways is an airline that has been struggling for years. In 2015 the airline announced a restructuring, and as part of this turnaround plan the airline expected to be profitable again by 2018.
Well, 2018 results are in, so how did Thai Airways do? Not well, not well at all. Thai Airways has reported 2018 losses of 11.6 billion baht (~365 million USD), up from a loss of 2.1 billion baht (~66 million USD) in the previous year.
Ouch. So while 2018 was supposed to be the year where they turn around, instead they lost five times more money than in the previous year.
Here are some interesting statistics about Thai Airways’ 2018 results:
- Operating income rose 3.9% year-over-year
- During the year the airline took delivery of five planes and retired two, meaning they had a net increase of three aircraft, bringing their fleet to 103 planes (note that part of their 2015 turnaround plan was to greatly reduce the size of their fleet, though it has only gotten bigger rather than smaller)
- Thai’s average load factor decreased from 79.2% in 2017 to 77.6% in 2018
- Available seat kilometers increased by 2.9% in 2018, while revenue passenger kilometers increased by 1% (in other words, they added significantly more capacity than passengers)
No need to worry, though, folks. Thai Airways now has a new turnaround plan — the airline will now make money by 2022!
The problems at Thai Airways seem obvious, though I haven’t really seen much change over the past few years, despite their supposed restructuring. The way I see it:
- Thai Airways doesn’t have a competitive business class product on many of their planes, so many business travelers will avoid them
- The airline still flies 747s, which have a terrible business class product and which aren’t efficient
- The airline only operates widebody planes, and while they have a low cost carrier with narrowbodies, there are plenty of business markets where there’s not enough demand for a widebody, but where a low cost carrier doesn’t cut it
- The airline said they’d cut many of their unprofitable longhaul routes, though I haven’t seen many cuts
- The airline also said they’d improve revenue management; anecdotally I find that Thai Airways has highly uncompetitive prices in many markets, no doubt causing them to lose market share to other airlines, especially since the Gulf carriers typically have excellent fares to & from Bangkok
Bottom line
I like flying with Thai Airways, and I love visiting Thailand, but there’s no denying the airline is a bit of a mess. 2018 was the year where they were supposed to become profitable, but instead their losses just keep getting bigger.
The airline blames high oil prices and fierce competition on their losses, though it seems to me like it goes much deeper than that.
I’ll be curious to see if Thai actually makes more significant changes under the leadership of their new CEO, or if they’ll just keep moving forward their estimated year of profitability by a few years, as they’ve been doing.
I have been flying TG from Sydney to Bangkok once or twice a year and they have the cheapest fares and best service compared to Qantas and Emirates. I only fly direct.
I fly during early February and return one month latter and fly out early June and return late August.
They are obviously a badly managed airline but still cheapest and best service by far.
Oh Thai has cut back on some popular routes. BKK Sydney has gone from thrice daily to once a day on a 744. Delhi has gone from thrice a day to twice a day. No service to the US at all. None to Canada as well. There is lots of business travel to Bangkok, not just cheap tourists. The UN and Japanese companies have big operations in Bangkok. Yet, Thai has stopped flying to NYC....
Oh Thai has cut back on some popular routes. BKK Sydney has gone from thrice daily to once a day on a 744. Delhi has gone from thrice a day to twice a day. No service to the US at all. None to Canada as well. There is lots of business travel to Bangkok, not just cheap tourists. The UN and Japanese companies have big operations in Bangkok. Yet, Thai has stopped flying to NYC. Also Suvarnabhumi and Thai have problems with ICAO, the Japs, Koreans and Yanks on safety issues. Thai was a great airline in the 80s and 90s and has fallen on hard times. Mismanagement and competition from low cost carriers and the Chinese. Bangkok holds much promise as a transit point, ahead of SIN, HKG or SEL. Hope Thai gets its act together soon.
Unless the Thai government "bite the bullet" and stop promoting ex military to manage Thai Air by bringing in experienced overseas airline managers, they will crash. Big losses the last two years cannot go on. Meanwhile QANTAS are unhappy because they only made a net profit of $891 MILLION this year which is down by 6.5% from last year. I doubt if Thai air would have a fraction of the wage bill that QANTAS has...
Unless the Thai government "bite the bullet" and stop promoting ex military to manage Thai Air by bringing in experienced overseas airline managers, they will crash. Big losses the last two years cannot go on. Meanwhile QANTAS are unhappy because they only made a net profit of $891 MILLION this year which is down by 6.5% from last year. I doubt if Thai air would have a fraction of the wage bill that QANTAS has got. Experienced management is Thai Air's only chance, but will anyone in the Thai government believe this. They would rather let the airline crash than lose face by employing a foreigner.
I think - not sure anymore - that I remember when Thai was rated #1 in world by international travelers. Of course this was when NW Orient was still flying. Ha Ha
I was looking at prices just now from India to Bangkok (with more than a month flexibility on dates). Thai lowest pricing is around 14k INR. Local Indian airlines are offering the same route for 7.5K and 9K. Granted Thai will have a cute attendant serving me dinner with a smile ... but that's, at best, worth only 0.5k to me. There is nothing extra in this flight that would be worth another 6.5k. I used to be their regular customer 10 years ago ... but not anymore.
I fly London-Sydney a few times a year, and usually fly Thai. Last month i tried Singapore (and paid a premium for that). The food, service and etnertainment on singapore was much worse than Thai. As one of the previous commenters said, it is so sad that good service just does not seem to pay. I find Thai has the best service from London to Australasia. But yes, as other commenters have said, they are...
I fly London-Sydney a few times a year, and usually fly Thai. Last month i tried Singapore (and paid a premium for that). The food, service and etnertainment on singapore was much worse than Thai. As one of the previous commenters said, it is so sad that good service just does not seem to pay. I find Thai has the best service from London to Australasia. But yes, as other commenters have said, they are constantly being udnercut by the Gulf carriers.
I find a big problem is also the website. It is hard to navigate. Their pricing policy seems very archaic. The frequent flyer points programme online also. And they don't offer the upgrade auctions of other airlines. Bangkok airport is also a mess comapred to Singapore. Still, for me Thai offer the very best service, and I am going to go back to them for the rest of my trips this year.
I enjoy the audacious arrogance here, as though the love of airplanes have somehow bestowed on you natural business insights as well.
This is such a reductive take on the airline's current financial health.
@AYL: I don't know what you are talking about. TK posted a net profit of USD 753m for 2018 (up from 223m in 2017).
so far nothing beats Turkish loss of $1.5 billion
Ha I’m flying the short trip from Bali to Bangkok in a Thai 747 next week. Then a380 to LHR. What a mix. Can’t wait. Lol.
@Aaron Tan, if the Thais banned BA from flying to Thailand, the Brits would ban Thai from flying to the UK. If the Thais banned Air France from flying to Thailand the French would ban Thai from flying to France. See where this is going?
Thai Smile is not exactly low cost, right? And let’s not forget Emirates.
This is a royal joke, but true from @The Grim Corsair, as he has a second family there as well in the US. Sadly, the US is still off limits for TG.
During my around-the-world 747 trip last March, I flew THAI 747’s twice, and while speaking to the flight deck crew, it was interesting to learn that the reason they still flew 747’s was that the new King of Thailand Maha Vajiralongkorn preferred them,...
This is a royal joke, but true from @The Grim Corsair, as he has a second family there as well in the US. Sadly, the US is still off limits for TG.
During my around-the-world 747 trip last March, I flew THAI 747’s twice, and while speaking to the flight deck crew, it was interesting to learn that the reason they still flew 747’s was that the new King of Thailand Maha Vajiralongkorn preferred them, and demanded they fly a 747 on the BKK-MUC route (since he had and still lived much of the time in Germany, oddly enough). So while I am grateful for any 747 in F, J, or Y, it seems that maybe some of the inefficiency is inherited instead of planned for at the airline level.
If this is a government owned airline, can’t the Thai government just ban the likes of Emirates, Qatar, BA etc flying to BKK, making tourism dependent on TG? The world loves Thailand. Technically what stops that being allowed?
Also, TG offers very good staff ticketing to its employee and / retiree as well as free tickets for member of parliment. Amazing Thailand ;)
But there's always billions of dollars to be made in the travel business.
@1KBrad
the only person who nailed it.
I think competition is a big part of the problem for them. And the fact that Thailand is much more a leisure destination probably doesn't help either
TG is run by executives with little or no experience in the airline industry. TG is also heavily affected by its face-keeping, corrupt officials. They offer an excellent service, they are poorly managed. Their divers fleet is the result of selfish exec kickbacks and massive embezzlement. But no worries, uncle T is bailing them out. Smooth as silk. Amazing Thailand.
@Stephen
Theres nothing wrong with that. Singapore flies nine daily wide bodies to Jakarta, including more than 6 777s I believe. They also do a full meal service. It's the norm in Asia. If the capacity is there, the planes will be big.
Similarly, Garuda also flies somewhere like 5 or 6 daily A330s or 777s between CGK and DPS, a very similar route to BKK HKT. Full meal service as well.
Actually I...
@Stephen
Theres nothing wrong with that. Singapore flies nine daily wide bodies to Jakarta, including more than 6 777s I believe. They also do a full meal service. It's the norm in Asia. If the capacity is there, the planes will be big.
Similarly, Garuda also flies somewhere like 5 or 6 daily A330s or 777s between CGK and DPS, a very similar route to BKK HKT. Full meal service as well.
Actually I flew TG domestic once. It was not a full meal service. A 777 from BKK to CNX at close to dinnertime and we only got a wrap. Also, IFE was shut off. Unlike other Asian airlines, their domestic product is actually significantly worse than international.
@Ryes, I stand corrected with Cathay. Yes they did turn a profit this year after a few tough years. Also nice analysis of Thai's issues - let's hope they turn it around for the sake of themselves and the travelling public. As some have said though, Thai Airways is the National carrier and will never be allowed to fail (which is a good thing).
Thai Air is a corrupt mess.
It is the private airline of the government officials (remember Thailand is still ruled by a military junta) and the aristocracy. And their families.
Unless and until Thai brings in foreign management, which will never happen due to the factors set forth above, it will continue to be a money losing endeavour.
Why so many aircraft types? Corruption. Payoffs for each aircraft order. So they order all of them.
Every time I made a sad trip back to BKK (flying back to home, which I don’t want to do at all), I always see too many different kind of aircrafts parking at Swampy. Also, it’s just a classic case of “This Is Thailand” or TiT 555
@Ron B. For not being an expert you nailed it. I once had their VP of Fleet Planning tell me (half in jest and half in despair) "if it doesnt fly backwards we will buy 2 of everything". Oy! 744, 388, 359, 788 & 789 all do the same mission. Bigger mystery why did they buy 359 AND 788 & 789?
Step 1 dump both 4 engine WB fleets: 744 & 388. Until they do that its obvious they arent serious about profitability.
So much inaccurate comments... fly more Thai and you will know better
@Dave the 737-400 are long gone, no more USM flights...
@Ryes Thai Lounges are a disaster... BKK Business lounge is a joke (food + drink and too dated) and First lounge who just provide Moet & Chandon as Champagne (is this First class ??) and if you want to eat something, most items from food menu is missing, it's just not acceptable in...
So much inaccurate comments... fly more Thai and you will know better
@Dave the 737-400 are long gone, no more USM flights...
@Ryes Thai Lounges are a disaster... BKK Business lounge is a joke (food + drink and too dated) and First lounge who just provide Moet & Chandon as Champagne (is this First class ??) and if you want to eat something, most items from food menu is missing, it's just not acceptable in First sorry.
On-flight service even in First are going down... Thai FA don't even do their job like a FA in business with SQ or QR.
No miracle...
@ Dennis: Cathay makes money (after losing a bunch not on flying, but on financial bets on the price of oil), and in the US Delta makes far more money (per dollar invested, which is the only true way of measuring profit) than Spirit or American Airlines. Thai, as Lucky says, has a pretty inconsistent and generally crappy product on the business class end, where all the profits are made.
BTW, profits are tied to...
@ Dennis: Cathay makes money (after losing a bunch not on flying, but on financial bets on the price of oil), and in the US Delta makes far more money (per dollar invested, which is the only true way of measuring profit) than Spirit or American Airlines. Thai, as Lucky says, has a pretty inconsistent and generally crappy product on the business class end, where all the profits are made.
BTW, profits are tied to customer satisfaction and not product, but product is a major driver of customer satisfaction.
Too bad; Thai’s A350 was my favorite Biz product so far except a couple other reverse herringbones
@lucky:
Their A350 business class is worth trying. The hard product and service are much better than their old 777s.
During my around-the-world 747 trip last March, I flew THAI 747's twice, and while speaking to the flight deck crew, it was interesting to learn that the reason they still flew 747's was that the new King of Thailand Maha Vajiralongkorn preferred them, and demanded they fly a 747 on the BKK-MUC route (since he had and still lived much of the time in Germany, oddly enough). So while I am grateful for any 747...
During my around-the-world 747 trip last March, I flew THAI 747's twice, and while speaking to the flight deck crew, it was interesting to learn that the reason they still flew 747's was that the new King of Thailand Maha Vajiralongkorn preferred them, and demanded they fly a 747 on the BKK-MUC route (since he had and still lived much of the time in Germany, oddly enough). So while I am grateful for any 747 in F, J, or Y, it seems that maybe some of the inefficiency is inherited instead of planned for at the airline level.
I'm no airline expert. But it seems foolish to have so many different aircraft in your inventory. Maintenance nightmare. They should fly just two types of planes and that would help cut costs and ease training. Lets say the 737 size for regional and the 787 for longer flights. Am I wrong?
like Malaysia Air, both are state own airlines, unlike Malaysia air, the Thai government is flushed with cash from the boom of tourism and their currency goes through the roof against others. It is their national airlines, it will keep on going.
Thai airways still operates a couple of 737-400’s. Though I suspect these are only still in the fleet for USM flights as they used to operate a lot more of them.
@Dennis: Cathay turned a rather impressive profit this year, so that reasoning doesn't follow. Airlines can do well at customer service and be profitable.
@Bernhard: I'm not sure what you mean by that, TG offers F on that route (A380 FRA-BKK, 747 BKK-SYD). But I can understand on the pricing side of things.
As for Thai's issues, I actually don't think their hard or soft product is the issue. Yes, they still offer...
@Dennis: Cathay turned a rather impressive profit this year, so that reasoning doesn't follow. Airlines can do well at customer service and be profitable.
@Bernhard: I'm not sure what you mean by that, TG offers F on that route (A380 FRA-BKK, 747 BKK-SYD). But I can understand on the pricing side of things.
As for Thai's issues, I actually don't think their hard or soft product is the issue. Yes, they still offer angled seats in some planes, but those 747s were meant to die years ago. Rumour has it that the King's love for them is what has kept them around. Yes, they have 777s with angled seats, but those are used regionally and many competitors still operate angled J regionally (SQ, CX, OZ, NH, etc.). Beyond that, their lie-flat product is on par with most of the industry (NH and OZ use the same product, I believe). The food is fine, even excellent at times. The lounges are numerous and good enough. The brand is well liked and well regarded.
Thai's issues are pricing and efficiency. Old planes, many many variants, many layouts, lots of bureaucracy. BKK itself also seems to be a massive dumping ground for capacity from other airlines. EK used to have multiple 5th freedom flights (they've reduced this slightly), so does BR (who competes with TG on its route to LHR). It's a mess.
Just flew them from BKK to BLR. Only nonstop business class option. Mediocre at best. Plane old, average service and catering. No WiFi.
Route is very popular and business is almost always full. Many pax connecting from Tokyo who work for Toyota Electronics take the flight on a regular basis.
Faulty math maybe. It seems to be going around
Years ago I was using them a lot between Germany and Sydney in F. Competitive fares (not always the cheapest, but within a few percent), nice schedule, could spend a few days in Thailand on the way.
In the last few years: no competitive fares, no F on BKK-SYD or SYD-FRA, many aircraft changes, long layovers in BKK in both directions.
Thank you, but no thank you.
@Dennis - Exactly!!
@Stephen - Cheers, mate, but probably best to take a seat (I really really want to say and face the wall)!...but that would be rude :-( Many of us could list dozens of carriers that rotate widebodies over heavy domestic routes. There is a valid reason. Massive pax demand, cargo, and shock horror... aircraft utilization inbetween mid-haul - long haul flights, or using up older aircraft to max out the cycles!!!...
@Dennis - Exactly!!
@Stephen - Cheers, mate, but probably best to take a seat (I really really want to say and face the wall)!...but that would be rude :-( Many of us could list dozens of carriers that rotate widebodies over heavy domestic routes. There is a valid reason. Massive pax demand, cargo, and shock horror... aircraft utilization inbetween mid-haul - long haul flights, or using up older aircraft to max out the cycles!!! Oh and no, the cargo (pax) are not just going between HKT and BKK, they are feeding to/from mid and long haul services.
@Pete - yeah, I read that and was like hmmm.....
Also how quickly people forget the massive loses at the US carriers, and if it was not for baggage and other "screw you" fees, the US airlines would still barely be making profits. Even region of the world is not the United States or Europe when it comes to profit/loss vs humanity and economic concerns.
5-3 is 2 usually....
Thai service is pleasant but mostly their BC pricing is totally uncompetitive, both short and long haul.
In many cases they are even priced above SQ and SQ is has quite unreasonable pricing.
Hi Ben - one small correction: in the 2018 results bullet points you said Thai added 5 planes and retired 3, leading to a net increase of 2 planes, not 3. Sorry, very pedantic correction I know.
I have a friend whose family works high up in Thai government and he’s always talking about how the airline is disappointing. According to him, many Thai people would rather hop over to SIN or HKG to fly...
Hi Ben - one small correction: in the 2018 results bullet points you said Thai added 5 planes and retired 3, leading to a net increase of 2 planes, not 3. Sorry, very pedantic correction I know.
I have a friend whose family works high up in Thai government and he’s always talking about how the airline is disappointing. According to him, many Thai people would rather hop over to SIN or HKG to fly Singapore or Cathay than do their long haul on Thai. Seems their premium products are that lacking. Anecdotally, this mirrors my own experience in their long-haul First. The in-flight experience wasn’t brilliant.
Crazy..was on their a350 from Chiang Mai to BKK for less than $25.
Also, diversification to them is to have every widebody type available: 747, 380, 777, 330, 787, 350.
If you have to fly to Bangkok and Thai is your nonstop only option, as a business traveler you will fly them - trust me on that one.
Wait...if you get five and retire three your net increase is two, right???
Sadly, treating customer well (as Thai and Cathay do), does not seem to lead to profits. In fact, it seems the worse you treat them, the more profits you make. This trend will only lead to a further degrading of the airline industry.
I mean, they fly multiple 747s (and 777 and a330s) between BKK-HKT every day (a flight of less than 1.5 hours). That’s one of many problems with their fleet, as you discussed. IIRC, they also do full meal service on those flights, even in Y.