Thai Airways managed to reduce its losses in second quarter 2012 compared to 2011. The airline will however need to further increase its financial performance to sustain competition in its market.
BANGKOK- Thai Airways International reported a net loss during the second quarter as the carrier faced continuous uncertainties in some of its key inbound markets –especially out of Europe as well as rising jet fuel prices. Despite these difficulties, the airline reduced its net loss from THB 7.87 (US$ 250 million) for the same quarter of 2011 to THB 1.46 billion (US$ 46.3 million) this year. The result remains however weaker than the first quarter of the year.
The carrier continues to be under pressure to lower its fares as competition continues to increase on most markets, but particularly on regional destinations out of Bangkok. Thai is counteracting by offering promotional fares during the low season period. Despite high occupancy in the cabins, fares are still under pressure.
“When compared to the same period last year, Thai’s cabin factor indicated an excellent result for the low season period. Unfortunately, Thai was still subject to an unfavourable world economic situation and intensified competition, which restrained the airline from increasing its selling prices. Simultaneously, fuel prices remained high although Thai’s fuel hedging strategy indicated satisfactory outcome.
Thai Airways International is systematically implementing its cost reduction programme. But results were also affected by repairs on the runway at Suvarnabhumi Airport in June, which caused flight delays and increased expenses”, explained Chokchai Panyayong, Executive Vice President of Strategy & Business Development and currently Thai Airways Acting President.
The recent launching of Thai Smile, an hybrid airline between low cost and full-service, will help Thai Airways gaining back market shares in regional markets. The carrier plans to have as much as 15 aircraft. The carrier flies currently to Macau and Chiang Mai and plans to launch new domestic routes before the end of the year.
Meanwhile, Thai Airways Chairman confirmed that TG would abandon for now the idea of having an ultra-low cost airline as its financial situation does not allow the carrier to invest into any new subsidiary. Instead the airline is looking at increasing its influence on Nok Air and work out a strategy which could see its domestic low cost affiliate venturing into international markets. Nok Air attempted to fly to Vietnam and India in 2008 but had to stop only after a few months due to mounting losses on its two routes to Bangalore and Hanoi.
Thai Airways will now look to improve its financial performance, its top priority. According to a report from the English Thai daily the Nation, they could be a reduction in the administration, especially within the corporate communication and public relations department.
Luc Citrinot a French national is a freelance journalist and consultant in tourism and air transport with over 20 years experience. Based in Paris and Bangkok, he works for various travel and air transport trade publications in Europe and Asia.
