THAI set to become 'first-choice carrier'<\/p>\n
BANGKOK (JP): The massive reform launched by Thai Airways
\nInternational (THAI) at a large conference here last week through
\na reengineering process tells the story of a state airline in a
\ndeveloping country struggling to shake off heavy government
\nguidance in order to address market forces.<\/p>\n
The reengineering should not, however, be misconstrued to
\nconclude that the Thai national flag-carrier is in trouble,
\ndespite the increasing bureaucratic hurdles it has encountered.<\/p>\n
Nor is it losing money. THAI remains one of Asia's best
\nairlines, alongside Singapore Airlines and Cathay Pacific, and
\n1995 marked the 31st consecutive year of profit for the 36-year-
\nold carrier.<\/p>\n
The reform was instead prompted by THAI's early realization
\nthat it had to adjust to the rapid changes in the travel market
\nand the airline industry to remain competitive and a world
\nleader.<\/p>\n
The goal THAI set for itself is ambitious. The vision for the
\nreengineering program sets THAI as the \"first-choice carrier,
\nsmooth as silk, first time every time\" in its 72 destinations in
\n37 countries, including Jakarta and Bali.<\/p>\n
That looks like a tall order for an airline about which most
\nof the print media stories between 1989 and 1992 had been related
\nto the internal bickerings between the air force nominee
\ndirectors and bureaucrats on one hand, and the professional
\nmanagement on the other.<\/p>\n
Stories about THAI since late 1989 were related mostly to
\ninternal factionalism, nepotism, behind-the-scenes direct
\ninterference from politicians and air force officers with lack of
\nvision for the civil aviation industry and questionable
\nprocurement contracts.<\/p>\n
The immediate impact was a declining staff morale and profit
\nmorale, questionable appointments and procurement contracts and
\nan airline burdened with 14 different types of jets and 12 types
\nof jet engines.<\/p>\n
Those were the biggest problems faced by Thamnoon Wanglee, who
\njoined THAI in 1969 when he took over the management as the
\nairline's second civilian president in October 1993.<\/p>\n
\"We have thought of many good ideas for improvement to restore
\nour past glory days, but we have to face heavy interference from
\noutside,\" noted Chusak Bhachaiyud, vice president for THAI's
\ntechnical department, at the three-day THAI Corporate Planning
\nConference.<\/p>\n
The problems encountered by THAI, notably those over the past
\nfive years, were not alien to state companies in most developing
\ncountries: regulation-infested and politically controversial
\nprocedures.<\/p>\n
THAI is 93 percent owned by the finance ministry and 7 percent
\nby the investing public, but is also under the administrative
\npurview of the transportation ministry. Its 15-member board of
\ndirectors represent more than 10 different government agencies.
\nMost major decisions are made by the board and not by the
\nmanagement.<\/p>\n
The difference, however, lies in the importance of the role of
\nTHAI in the tourism industry, a leading sector of Thailand's
\neconomy. That seems to have jolted Thai politicians to the
\nurgency of reinvigorating the airline.<\/p>\n
With a current account deficit estimated to remain as high as
\n8 percent of its gross domestic product -- due to an estimated
\nincrease in the trade deficit to US$16.4 billion from US$14.9
\nbillion last year -- any foreign exchange gains are greatly
\nwelcome.<\/p>\n
As the almost seven million foreign tourists who visited
\nThailand last year spent about US$6.8 billion, tourism is surely
\none of the largest foreign exchange earners.<\/p>\n
Since THAI is the largest carrier of inbound tourists and the
\nmost aggressive in promoting tour programs, the airline's
\nperformance significantly influences the tourism industry.<\/p>\n
THAI's cargo division plays an equally important role in
\nsupporting the export sector. The airline, besides carrying 12.8
\nmillion passengers, airlifted 543,000 tons of freight last year,
\nan increase of 11 percent from 1994. About 43 percent of the
\ntotal cargo was related to Thailand's export industry.<\/p>\n
Multifaceted role<\/p>\n
The multifaceted role of THAI, including its employment of
\nmore than 22,000 people, seems to have brought the blunt message
\nhome to Thai politicians and the air force -- which used to
\ndominate the board of directors -- that THAI should be restored
\nto its glory days before the mid-1980s.<\/p>\n
A supportive political environment for the reengineering
\nprocess was set by Prime Minister Banharn Silpa-Archa, who opened
\nthe three-day THAI conference which was attended by around 1,000
\nexecutives, including about 400 from outside Thailand.<\/p>\n
The conference was attended not only by THAI executives, but
\nalso those of major tour operators, cargo agents, travel writers
\nand the executives of travel-related businesses from around the
\nworld.<\/p>\n
Prime Minister Banharn reiterated the government's policy to
\nstrengthen Thailand's position as the aviation hub of Southeast
\nAsia and a favorite destination for international travelers.<\/p>\n
\"Thai Airways International will continue to play an important
\nrole in helping us achieve this goal,\" he said.<\/p>\n
THAI President Thamnoon Wanglee admitted that change is never
\neasy, but he is nevertheless confident that the right momentum
\nhas been set by the favorable political environment, so far the
\nbiggest missing factor.<\/p>\n
\"Once the reengineering process is complete, all major
\ndecisions will be delegated from the board of directors to the
\nmanagement, thus allowing operations to run far more
\nefficiently,\" Thamnoon confidently said.<\/p>\n
There is actually another positive internal factor which will
\nhelp facilitate the drastic changes called for by the
\nreengineering process.<\/p>\n
THAI had the advantage of learning through experience from
\nScandinavian Airlines -- then the world's best airline in terms
\nof service quality -- which was its shareholding partner since
\nits founding in 1960 until 1977.<\/p>\n
The early emphasis on service quality and modern technology,
\ntogether with Bangkok's position as the leading regional hub for
\nflights from Asia to Europe until the emergence of the long-haul
\nBoeing 747-400 jetliner in the late 1980s, have combined to make
\nTHAI a leader in Asia.<\/p>\n
Customers<\/p>\n
There is nothing completely new being undertaken by THAI
\nthrough its reengineering program. What will make the THAI reform
\nlikely more successful than the restructuring conducted by other
\nstate airlines is the pace and the extent of its implementation.<\/p>\n
The reform process actually started in May 1995 when THAI
\nhired Booz Allen and Hamilton Management Consultants to prepare
\nthe reengineering process and the program that started early this
\nyear, THAI's 36th anniversary.<\/p>\n
The components of THAI's reengineering are all basic to the
\nneeds of air travelers: safety, (superior aircraft). smooth and
\nefficient reservation check-in and baggage handling, excellent
\ninflight service, punctual flights and convenient connections and
\nmoney-saving deals (fares).<\/p>\n
The program focuses on technology and human resources, as they
\nare the most fundamental to facilitate the provision of excellent
\nservices and convenience to passengers.<\/p>\n
The two factors are key to improving an airline's value (fleet
\ntechnology) and product value.<\/p>\n
THAI therefore has embarked on retraining its 6,000 customer
\ncontact staff, from marketing, reservation and check-in staff to
\nflight attendants.<\/p>\n
The airline opened a common check-in system for all its
\ndomestic flights.<\/p>\n
\"Our target is to keep lines at the check-in counters down to
\na maximum of 10 passengers,\" said Nares Hovatanakul, the vice
\npresident for service support.<\/p>\n
An advanced multi-access computer check-in system is under
\ninstallation to speed up the check-in process not only for THAI
\noutbound passengers, but also those of the other 62 foreign
\ncarriers for which THAI is the handling agent.<\/p>\n
Baggage handling is being improved to enable passengers to get
\ntheir luggage within 30 minutes at the latest after the aircraft
\nhas landed.<\/p>\n
The THAI Phone, a 24-hour automated information service to the
\npublic was established in Bangkok to enable passengers through
\nphone calls or fax to get information on all THAI flight arrival
\nand departure schedules and other information travelers usually
\nneed to know.<\/p>\n
\"We are making service improvements at every point of contact
\nwith our customers,\" Nares said.<\/p>\n
Flight punctuality obviously is impossible without a modern,
\nwell-equipped maintenance center and latest-technology fleet.<\/p>\n
THAI boasts a modern maintenance center which has gained full
\naccreditation of certification from the Federal Aviation
\nAdministration in the United States and the Joint Aviation
\nAuthority of Europe.<\/p>\n
The maintenance center surely has been playing an important
\nrole in putting THAI flight punctuality records at the top of the
\nOrient Airlines Association listing.<\/p>\n
THAI, which currently operates 71 planes, has ordered 21 new
\njetliners of the latest generation, comprising Boeing 747-400s,
\nBoeing 777-200s\/300s, Boeing 737-400s\/500s and Airbus 330-300s
\nand A300-600s for deliveries between 1997 and 2000.<\/p>\n
In fact, THAI has often been in the forefront in the
\nacquisition of new technology. It was, for example, the first
\ncarrier in Asia to operate the 315-seat Airbus 330-300 in 1994
\nand the 358-seat Boeing 777-200 last March.<\/p>\n
By 2000, the THAI fleet will consist entirely of the latest
\ngeneration of jetliners and will complete the phase-out of its
\nold planes, such as the Boeing 747-200\/300s, DC-10s and Airbus
\n300-B4s.<\/p>\n
Of a greater boon to the efficiency of its operating,
\nmaintenance and inventory costs is the decrease in the types of
\naircraft and engines, from 14 and 12 respectively at present, to
\nsix each by 2000.<\/p>\n
\"Customers always compare us with Singapore Airlines and
\nCathay Pacific. True, their service reliability is still slightly
\nbetter than ours but these two airlines operate only two types of
\nengines,\" said Chusak.<\/p>\n
\"I think THAI still compares favorably with Singapore Airlines
\nand Cathay,\" noted Ale Sugiarto, president of the Jakarta-based
\nAnta Express, one of Indonesia's largest tour operators which has
\nbeen associated with THAI as its agent for over 25 years.<\/p>\n
Thamnoon said in total the reengineering program covers 43
\ninitiatives for improvement in customer service and image, staff
\nresources and management excellence, productivity and inventory
\nand equipment and fleet utilization.<\/p>\n
Alliances<\/p>\n
The reengineering program is supplemented by THAI strategic
\nalliances with two of the world's biggest airlines, Lufthansa in
\nEurope and United Airlines in the United States.<\/p>\n
\"We are significantly improving our flight connections by
\nextending our service networks to cover more than 110
\ndestinations in Europe through our alliance with Lufthansa,\"
\nThamnoon said.<\/p>\n
The alliance with United Airlines, beginning in October, will
\nenable THAI to bundle traffic worldwide through what is known in
\nthe airline industry as seamless transfers.<\/p>\n
Through the alliances, the three airlines can coordinate their
\nflight schedules, passenger service facilities and have code
\nsharing arrangements which enable them to offer seats on another
\npartner carrier using their own designator code.<\/p>\n
\"We will be in a position to build an aviation superhighway,
\nusing Bangkok, Frankfurt, Los Angeles, San Francisco, Dallas,
\nDenver and Chicago as our main hubs,\" the THAI president noted.<\/p>\n
That means THAI will be able to expand its route networks and
\noffer services to destinations which otherwise would not be
\ncommercially viable. That will be a great boon to its business,
\nas the Asia, Pacific, European and North American regions account
\nfor 80 percent of the world's traffic market. (vin)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/thai-set-to-become-first-choice-carrier-1447893297",
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