Thai International Expands Operations

Thai International is indeed one of those rare aviation animals that is both wholly government-owned and yet highly profitable. Like its regional compatriots, it has to achieve its operating profit through excellent customer service, high levels of operating efficiency and a viable correlation between yield and capacity. The fact that Thai has now enjoyed no less than 21 consecutive years in profit puts it right at the top of the world’s most successful and well-managed carriers.

In many ways Thai International is as old as aviation in Thailand. And that’s old. Thailand was the birthplace of aviation in Asia with the first pilot’s licence being issued back in 1912, less than a decade after the Wright Brothers made history on the sand-dunes of Kittyhawk. The Thai Royal Family constantly maintained a close interest in all things aeronautical and helped to promote flying as they wisely appreciated that this could in time hold great promise for their emerging nation. How right they were! So enthusiastic were the powers that be, that Thailand was able to organise its own air wing to dispatch to the Western Front as a part of the Allied Expeditionary Forces of 1918.

Following the War, aviation grew steadily in Thailand at a time when most neighbouring Asian states had not even seen an aircraft. An airline was formed in 1922 under the auspices of the Royal Aeronautical Society to fly mail between a number of internal Thai ports while eight years later the Aerial Transport Company of Siam commenced operations. Following World War 2 this company reorganised and renamed itself Pacific Overseas Airlines which in turn was eventually renamed Thai Airways Company Ltd – the modern-day owner of Thai International.

Thai International was formed in 1960 with the Government of Thailand holding 70% of the shares and Scandanavia’s SAS the remaining 30%. Wisely, the Thai Government appreciated that it needed a modern-day international flag carrier yet at the same time one that was wholly efficient and extremely well managed. The importation of Northern European expertise was itself a master stroke and one that helped mould the carrier into the force it is today. In fact it has only been in the last two or three years that SAS have all but departed the scene, such was the long-lasting and highly beneficial involvement by the Scandinavians. The association between the two carriers was also of benefit to SAS as it allowed that carrier to operate with a close ally in a far-flung area of the world in addition to providing additional maintenance work for the European-based KSSU group which comprises Swissair, KLM, Sabena and SAS. In 1977 the Thai Government officially purchased SAS’s 30% Thai International shareholding and today the Government owns 100% of the operation though up to a third of this is set to be offered to the marketplace later this year as a means of further expanding the airline’s capital base.

Back in 1960 the carrier commenced operations with a fleet of Douglas DC-6B aircraft and trailblazed a network of Bangkok-based routes throughout Asia. These were the early days of a boom period in Asian air traffic. The Vietnam war was on the horizon and large-scale capitalization and financial development of the region was just getting into stride. Thai international’s timing could not have been better.

The march beyond Asia though was not to be rushed as SAS and the Thai Government wisely appreciated that the airline had to be more than a mere subsidised flag carrier. Therefore, growth was restricted to Asia for some eleven years till the new airline had the right equipment, and international expertise, to venture into the world of the long haul carrier. It is a point of note that Thai’s first intercontinental port was Sydney. Australia always loomed large in the potential air bridge linking the old and new worlds of East and West and eventually, Melbourne was added to the network in 1980 with Brisbane and Perth two years later. During 1985 it was mooted that Thai might consider operating into Adelaide, this has now been firmly scuttled though the carrier is keen to explore the possibilities of flying direct Airbus services between Bangkok and Darwin and Cairns.

By this time though the carrier had made a number of firsts in Asia. It was the first carrier to introduce short to medium-haul jet aircraft when in 1962 it commenced operating Caravelle twinjets. Similarly, Convair CV990 Coronados were introduced on the longer hauls, these in turn being replaced by the vastly more efficient Douglas DC-8s. It was the seventies though that would usher in the Thai International that we know today. Europe was added to the flight plan as were the Gulf States in addition to additional ports within Asia. The first wide-bodied aircraft were acquired in 1977 when both DC-10 trijets and Airbus A300s were brought into the fleet. Two years later the first 747s would wear the Royal Orchid livery and provide the stepping stone to the commencement of non-stop services linking Thailand with a number of European capitals.

Today, Thai is a market leader in Asia, the world’s fastest-growing arena of civil air transport. Indeed it must be a leader as its competition comprises some of the world’s most respected carriers and from the very beginning, the carrier realised that to survive and prosper you had to be at the top of the class. It is not surprising then to find that Thai is a hallmark of the standard traits of a successful carrier in the free market. Its cabin service, particularly in business class, is superb, its vast engineering facilities at Bangkok’s Don Muang airport are first class while its fleet is new and highly efficient.

Overseeing its entire operation is a philosophy of giving the customer what he wants. During the period from 1977 Thai was able to perform exceptionally well against extremely competitive regional rivals by employing the Airbus Industrie’s A300 twinjet where the competition only had available much larger DC-10 and Tristar trijets. The end result of this was that once more frequently beat size and Thai consequently gained a larger market share in these important markets against its direct sector to sector competitors than it had originally hoped for. On the long haul, the introduction of the 747-200 enabled Thai to fly non-stop across the Soviet Union to Copenhagen, Rome and Athens. Thai was the first airline to pioneer these new time and fuel saving routes and will expand heavily upon them this year as London, Paris, Zurich and Amsterdam are added to the list.

The advantages of these express flights are two fold. Firstly operating expenses are reduced as one or more stops at airports between Bangkok and Europe, where fuel prices more often than not are very high, are avoided. This then enables the carrier to offer lower prices which in turn stimulates load factor and tourism. Secondly, the convenience of the non stop flight concept by itself attracts passengers, not only to and from Thai- land but also between Europe and other Asian destinations that the carrier serves with connecting flights. Due to its geographic position, Bangkok is now an excellent hub to plan long-ranging non stop sectors into Europe, something that other carriers, such as British Airways are now well aware of.

Visitors to Bangkok airport in the past year would no doubt be aware of the massive amount of construction work that is presently taking place at Thai’s home base. The carrier’s new engineering and maintenance facility is now fully operational, having been officially opened in 1985; while the 4. 5sq kilometre air cargo centre, one of the largest in the world, is due to become fully operational in 1988. A new terminal is also being built and when the entire operation is complete, around 1989, then Don Muang International will rival the best in the world and no doubt will attract much hub traffic from nearby Singapore and Hong Kong.

Air cargo is big business for Thai, as it is nowadays for most carriers. The carrier derives some 17% of its total earning power from air freight though it has been several years since the airline owned a dedicated freighter aircraft. Nowadays the trend is emerging for additional freight uplift and so an A300 has been taken out of service for conversion to Combi status. Configured with 120 economy seats the A300B4 Combi, the first of its type in the world, will operate on regional routes where the seasonal uplift of freight is greater than the corresponding passenger needs of the time. The conversion time is put at around five months with the Airbus Combi expected back into service by this April.

Thai’s fleet now includes some two dozen large jet aircraft, in greater detail the fleet comprises;

Boeing 747

The 747 needs little introduction and nowadays constitutes a considerable portion of the total uplift of most long-haul carriers. Thai acquired the first of six 747-200Bs in 1979 with non-stop and one stop express three-class services to Europe in mind. Since then the airline has used these behemoths to good use in expanding its uplift into Australia and pioneering new routes into the USA. Operating via Tokyo, Thai now serves Seattle and Dallas and are proud of the fact that they are the only carrier linking Texas with Japan. Thai’s -200s are flown in a three-class configuration with business class on the top deck and zone B with the aft three zones configured for economy and the nose section for First Class.

During 1985 Thai ordered 2 747-300s and optioned a third. The first is due to enter service this year and will enable the airline to compete with the new EUDS of rivals Cathay and SIA. In time it is almost certain that Thai will also order some -400s and no doubt will be looking to replace its 200s during the early nineties as general policy is not to keep aircraft for longer than ten or twelve years.

Thai should also be commended on the fact that though they actually purchased retrofit kits to convert their 747s from 10 to 8 main deck emergency exits (and so gain additional seating) the carrier wisely decided in 1985 not to proceed with this modification and retain maximum exit capability for its 747s.

Airbus Industrie A300

Thai operate two marks of this well-established regional twinjet -the early model A300B4 (like our own Australian Airlines) and the newer A300-600. Thai pulled off a coup in 1977 with the introduction to service of this aircraft at a time when its regional competitors only had the much larger and less fuel-efficient trijets at their disposal on competing Asian routes. By operating high-frequency services Thai, with their smaller Airbus twinjets, were able to capture a higher proportion of the high-yield business market than their rivals would have liked. The tradition is carried on today with the newer A300-600s which feature vastly improved economics, by around 13% per air mile, carbon brakes, EFIS two-man flight deck and longer range. The -600s can range at max payload out beyond 3600nm thus enabling them to serve far-off ports such as Seoul, Tokyo and even Perth though the latter is usually serviced with the larger DC-10 due to lack of alternates on the inbound sector. The airline presently operates 12 B4s and 4 -600s with 4 additional -600s due to be delivered over the next two years. The Airbus’s are operated in a two-class business and economy configuration with 244 seats. Eventually, with 20 on strength Thai will be the largest operator of the popular European wide body in Asia and the airline is not shy in pinning much of its regional success on its choice of this aircraft rather than the larger trijets of the era.

McDonnell Douglas DC-10

Thai operates only two of these aircraft and their role is to principally supplement the activities of the larger 747 and the smaller A300 as required. They are excellent reserve capacity aircraft and economically accommodate the seasonal traffic variations that occur on every route through the course of a year. Thai also recently ordered two new DC-10-30ER trijets to replace these ten-year-old models. The new aircraft with their Extended Range capability will also allow the airline to fly some of the very long-range routes with the new trijet as it presently does these only with the 747. This will offer Thai additional scheduling flexibility in addition to being able to pioneer new long-distance routes in an effort to expand into new markets.

The new DC-10s will be delivered late in 1987 and through early 1988 while the old aircraft will be sold outright as the present-day market for the once much-maligned Ten is now very strong indeed.

So much for the present fleet but what of the future? Thai will no doubt eventually order a number of new 747-400s to replace their existing -200s and augment the new EUD-300s. The just-ordered DC-10s and Airbus twin-aisle fleet though present a different picture. Obviously, the carrier will always have a predominant need for the regional A300-type twinjet and will probably replace these ultimately with A330s or rival Boeing 767- 300 in ER or LR mode. Thai actually had money down on the 767 twinjet several years ago but reverted to Toulouse and opted for the A300-600 instead. The carrier has also been keen on the MD-11 for a long time. Indeed, back in 1983 Thai had firm paid deposits on the now defunct MD100 trijet and though they might opt for the A340, due to its A330 commonality, the big Long Beach trijet still stands as a firm contender to wear Thai livery.

With load factors that its American competitors would gloat over, with 21 years of consecutive nett profit behind it and one of the most modern and flexible fleets in Asia, Thai International stands proud as an example of what the Asean nations are capable of in the international air transport environment.