“Thai Airways, Smooth As Silk” is a famous slogan of THAI which indicates the brand signature and highlights the philosophy of service. As a national airline of Thailand and the world’s premier carrier, THAI aims to provide the best service and the smoothest way to fly (Thai Airways, n.d.). Thai Airways has always been the world’s top airlines for its quality service. Thus, it is no surprise to find Thai Airways so high up on the world’s best airline award list (Zhang, 2017).
According to Skytrax (n.d.) Thai Airways was ranked 2nd in the world’s best airline of 2007. However, the company is failed to regain its past prestige as one of the top 3 world’s best airlines, and this failed attempt continues to grow more dangerous.
After achieving profitability for the past 40 consecutive years, Thai Airways recorded a loss for the first time in 2008 with approximately 21 billion baht ($675 million) due to high fuel costs and political situation (Thai Airways, n.d.). Thai Airways has always been struggling almost every year since then. However, other major airlines in Thailand were indeed able to earn a profit in the past several years. Bangkok Airways and Thai Air Asia which are private airline companies have generated relatively good benefits, whereas a national airline company as Thai Airways struggled (“?????????????????????? ?????????????????????,” 2015). THAI struggled with three consecutive years of losses since 2013 until 2015 (Ono, 2017). Thai Airways financial is not at all smooth as silk.According to THAI financial data from 2013 until 2016, Thai Airways revenue is declining every year. Even though Thai Airways have returned to the black for the first time after three years of consecutive losses, the recovery was mostly due to lower oil prices and lower restructuring costs rather than the improvement of operations (Ono, 2017). Even though THAI reported a net profit in 2016, the number of total revenue decreased by 4.3% mainly due to the decrease in Passenger and excess baggage revenue. Passenger and excess baggage revenue decreased by 2.9% which is approximately THB 4,428 million. THAI increased traffic production to support the growth of Asia region by launching the new route which is Bangkok- Tehran, Iran and expanding the new routes operated by ThaiSmile throughout ASEAN, China, and India. This resulted in 4.2% increase in the traffic production, yet the passenger traffic increased only by 0.4%. On the other hand, THAI decreased traffic production by 1.3& in the intercontinental region. Therefore, the number of passengers and excess baggage revenue dropped to 55,916 million which is 4.7%. Total expense decreased mainly due to a decrease in fuel expense and Impairment loss of assets and aircraft. Fuel and oil expense was 28.3% lower than last year due to a decrease in average jet fuel price by 21.6%. Impairment loss of asset and aircraft dropped 70% as Thai sold 5 in-active aircrafts. This leads to my research question: What factors influencing the decline of the financial performance of Thai Airways during 2013-2016Objectives : – Determine and analyze the influencing the decline of the airline’s financial performance
– Assess the future of Thai Airways