With Focus On India's Growing Demand, Thai Airways To Double Fleet Size

Thai Airways International, which faced bankruptcy in 2020 due to poor management and the impact of COVID-19, is preparing to make a strong comeback.

In pursuit of expansion, Thai Airways plans to double its fleet size, which had been reduced during its restructuring phase, with a particular focus on improving routes to India, as reported by Nikkei Asia.

India, with its large population and longstanding cultural and economic ties to Thailand, presents a significant opportunity for Thai Airways. The decline in Chinese tourists due to Beijing's zero-COVID policy has prompted collaboration between public and private sectors in Thailand to attract visitors from India.

In 2022, approximately 990,000 Indians visited Thailand, making it the second-largest source of tourists after neighboring Malaysia. Preliminary figures for January to May 2023 also indicate a strong influx of Indian visitors, with 600,000 arrivals during this period.

To support its expansion plans, Thai Airways intends to increase its fleet from the current 65 planes, a result of restructuring, to 113 planes by 2027. The growth will primarily involve the addition of small, narrow-body aircraft that offer better efficiency, particularly for short-haul flights.

Chai Eamsiri, CEO of Thai Airways, highlighted the suitability of narrow-body aircraft for secondary markets in India, which may not have the same passenger demand as major cities like Delhi and Mumbai.

Thai Airways' decision to shift from a rationalisation strategy to expansion is based on its improved business performance. The airline sought bankruptcy protection in May 2020, primarily due to the COVID-19 pandemic but also due to pre-existing issues with corporate management, resulting in losses in the three fiscal years leading up to 2019.

The first step in the restructuring process involved freeing the airline from restrictive regulations governing state-owned enterprises.

Thai Airways, which was majority-owned by the Ministry of Finance, sold a 3.17 per cent stake to Vayupak Fund 1, a government-affiliated investment fund, in May 2020. This enabled the airline to operate without the burden of state-owned enterprise regulations, which had previously slowed decision-making processes.

Workforce and fleet reductions were also implemented to align with the company's sales volume. The number of employees has been halved to around 10,000, and the fleet size, including leased aircraft, has been reduced from 103 to 65 planes.

Positive signs of recovery are emerging as travel restrictions ease post-COVID, leading to increased passenger demand. Thai Airways posted an operating profit of 7.7 billion baht ($217.3 million) in its consolidated results for the year ending December 2022, excluding one-off factors. This marked a significant turnaround from the 19.7 billion baht loss incurred in the previous year.

Chai is determined not to miss the opportunity for growth and intends to pursue expansion before the government-led restructuring plan concludes in 2024.

Furthermore, Thai Airways plans to enhance domestic service efficiency by integrating management with its subsidiary, Thai Smile, which primarily operates domestic flights. This integration will facilitate seamless travel for passengers arriving in Bangkok from overseas to regional destinations within the country.

Chai also emphasised the importance of legal reforms to enhance competitiveness. Currently, government approval is required for aircraft purchases, a process that can take up to six months. Chai believes that speed is crucial in the industry and calls for a more efficient approval system.

The fate of Thai Airways under Chai's leadership holds valuable lessons for the aviation industry's resurgence in the post-COVID era.

By demonstrating successful recovery and pursuing growth strategies, Thai Airways aims to regain its position as a competitive player in the international airline market.