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Despite stalled growth in China, Brazil and Russia, a wave of newly middle-class travelers from the BRICs and beyond will start visiting international destinations in the coming decades — dwarfing the numbers we’ve seen thus far.
One thing low-cost carriers do that legacy airlines will find it hard to emulate? They don’t have top-heavy executive teams eating up many costs.
Thai Airways International (THAI) this year will be more operationally flexible and shorten its decision-making process in order to keep pace with the fast-changing aviation industry.
The national carrier will also focus more on cutting costs in order to return the company to profitability.
Chokchai Panyayong, THAI senior executive vice president for strategy and business development, and acting president of the airline, said that if everything went to plan, he believed sales would grow by 3-4 per cent from about 200 billion baht (US$6.1 billion) last year.
The carrier would also get back into the black, after suffering a loss of 12 billion baht last year, he said.
He acknowledged that THAI’s operational culture had not been in line the new business trend, resulting in lost business opportunity.
He cited the decision-making process in regard to closing low-performing routes as an example. Once the company sees such a performance level, it must either stop the route in question or reduce flight frequency very quickly.
However, the carrier has until now been taking too long to make such crucial decisions, resulting in rising losses, said Chokchai.
This year, THAI intends to cut costs to the tune of 2 billion baht via belt-tightening measures in its operations.
Among these measures is adjusting the number of aircrew on each flight to meet the actual number of passengers.
In addition, it will reduce the number of flights by 10 per cent and the overall number of seats by 3-4 per cent in the second quarter, which is the low season, said the acting company chief.
The cost-cutting programme will be operated alongside seeking ways to increase THAI’s sales, especially from non-core businesses such as catering and selling on-board duty-free products.
Last month, Chokchai presented THAI’s 2014 strategy to the carrier’s board, which agreed to change strategy in order to makes its operations — and the decision-making process, in particular — more dynamic.
The airline will have to balance supply and demand in providing its services, while cost reduction and pooling between THAI and its Thai Smile airline are also in focus.