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Piyasvasti battles Thai Airways’ beasts

by Kevin Rafferty
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He notes that the most recent Skytrax survey ranks the airline as ninth in the world, one place better than last year. “We would like to be fifth. We have four stars. There are about six airlines with five stars. We are on our way to becoming a five-star airline because the latest assessment given to us by Skytrax last month was really encouraging, seeing real improvements in many areas. We also got first prize Skytrax for airport services and first-class lounge. The time-consuming part is the retrofit of the seats and the inflight entertainment and here again we are making very solid progress. Things are actually moving.”

He’s confident enough to quibble with Skytrax over its demands. “For example, they say in first-class, you must have a small breadbasket for each person — that is something we have not done. I would really prefer not to have a breadbasket. They say you must warm the peanuts first for the passenger. I agree with that.”

I raise a question, surely not peanuts? “No, warm mixed nuts. I think that warm mixed nuts are a lot better.”

If all Piyasvasti has to worry about is whether to supply a breadbasket and peanuts or mixed nuts for passengers, then he can be confident about taking Thai Airways back to the elite club. But airline insiders say that the big beasts of vested interests have not been defeated, merely gone into hiding waiting an opportunity, say of renewed political turmoil in Thailand, to challenge again for power over the national carrier.

Richard Branson of Virgin Airlines once told me that the most important person on an airline was not the pilot — since he expected professionalism from his pilots to fly and land the aircraft safely every time — but the smile or sour attitude of the last cabin attendant or check-in clerk whose demeanor would convince the passenger whether or not to fly with the airline again.

It may not be the same in these days of cheap airlines where the lowest price is all that matters. For that, Piyasvasti has been the prime mover in setting up Thai Tiger Airways, a joint venture with Singapore in which Thai has a 51 percent stake, which will take off next year. “There are millions of people in Asia, China, India, Thailand, who have never flown before, and these people will be flying in the near future, and when they fly they will be flying the low-cost airlines, and that’s why this market has been growing the most rapidly, and we do not have any presence in that part of the market,” he says.

The move is controversial because it may pit Thai Airways against Thai Tiger, a worry that Piyasvasti brushes aside claiming that “the market is different because we serve the premium market, we will become a five-star airline. Thai Tiger is the ultra low-cost, along the model of Ryanair with cheap fares.”

Controversial Ryanair proposals, including cheap standing tickets, appeal to him.

“In the near future, why not, because that is I think what the people want. There are people who do not mind a little bit of discomfort but they want cheap tickets. In Thailand there are 65 million people, of whom only six million have flown before, so 59 million people have never flown in an airplane before. They are not going to buy tickets on Thai Airways — no — they will buy tickets on Thai Tiger. Thai Tiger will be scratching away passengers from the buses,” says Piyasvasti.

Thai Airways has first-rate pilots, among them former doctors, engineers and fund managers, Piyasvasti notes. But from the cabin crew galleys, there are murmurs of tensions that the new regime is causing. One senior cabin crew member, educated at one of Thailand’s best universities, gave a generally positive verdict on Piyasvasti because, “He is clean and honest, maybe to a fault.”

But, she added: “Does he understand that an airline career is not a 9 to 5 job? I am not talking only of our hours of working, which run right round the clock, but of the manifold aspects of the job, safety, serving passengers, dealing with unexpected things and people from many nationalities, often juggling four or five things at once. We are told we must do more, better, but often we find that there is ‘no stock’ of inflight equipment, that the meal quality has been reduced. The accountants want to cut crew numbers as if we are office employees, not coping with safety and service at 11,000 meters.”

There is a wider point that in the last decade or so Thai Airways has consistently fallen behind rivals like Singapore and Cathay in anticipating passengers demands and updating its seats and facilities. Whether it is because of infighting among the big beasts or because the 9-to-5 accountants can always return to see their DVDs at home and cannot imagine life at 11,000 meters, Thai Airways is a whole continent behind its competitors.

Piyasvasti will have his work cut out to bring top-class quality to his airline. After all, at least until 2014, he will have to travel to Singapore for his proper lie-flat bed in the air.


Comparing the competition

A gulf in quality has opened up between Asian airlines and those of the rest of the world. The airline industry is divided into so-called full-service carriers and budget carriers. Thai Airways, which was once in the upper tier, is scrambling to get back on top again.

But the gap between the world’s top airlines and the rest is growing, and indeed, the major U.S. carriers have started to close the gap with budget airlines by charging for everything that used to be taken for granted as part and parcel of an airline ticket.

According to Skytrax, there are just six, five-star airlines, all Asian. They are Asiana Airlines (Korea), Cathay Pacific Airways, Kingfisher Airlines (Indian), Malaysia Airlines, Qatar Airways and Singapore Airlines.

Skytrax is the leading global survey of airlines. It assesses carriers on their performance on the ground and in the air.

Some commentators have expressed surprise at the exclusion from the five-star list of Emirates Airlines and the inclusion of Kingfisher — because it is a small carrier with no first-class cabins — or even Asiana — because some of its aircraft are poorly equipped in regards to seating and inflight facilities (and the books in its lounge at Incheon are fakes).

Singapore Airlines is clearly in the lead, pioneering new standards in first class and business class comfort in its Airbus A380 aircraft, while maintaining good quality in economy seating.

Emirates is working hard to improve comfort and quality at the luxury end, but has let its economy standards drop to three Skytrax stars.

Cathay chose not to buy the A380, but is constantly looking at upgrading its seating and services.

The experience of Thai Airways and of the big Japanese carriers shows how easy it is to fall behind without continuously looking at new investments and improvements in a highly competitive environment. Piyasvasti admits that his airline does not make money from its first-class service, a big money-spinner for the top-quality airlines.

Japanese carriers have fallen behind despite — and also because of — high prices, a loyal Japanese clientele and protection from competition. A full-fare economy return ticket from Hong Kong to Japan costs about 37 percent of the same ticket originating in Japan. With the Japanese economy experience slow growth, there is little salvation in an exclusive Japanese model.

U.S. carriers are pioneering challenges to traditional flying by “unbundling” charges. In direct contrast to the quality airlines — where you pay for your ticket and then sit back, relax and enjoy free food and drinks, newly released movies and a whole catalog of inflight entertainment and games — the U.S. carriers are joining the budget airlines by charging for everything they can think of.

You want to check in a bag, pay; want a pillow or blanket, pay; want food or drink, pay; want to change your flight, pay at least $150. The U.S. airlines have returned to profit this year thanks to these “ancillary charges.” Worldwide, ancillary charges are a $60 billion market, but airline analysts say that this is “only” about 13 percent of all airline revenues and is bound to rise.

Ryanair, the Irish budget airline, wins the prize for chutzpah by charging passengers who pay by credit card, charging for checking in online, and charging if you dare to arrive without a printed boarding pass. The carrier is also looking into charging to use a lavatory onboard.

Graham Atkinson, the number two executive of United Airlines until the merger with Continental, compared a flight to buying a car: “When you buy a car, you go to a manufacturer’s Web site and you are confronted with a daunting list of options. Do you want a steering wheel? Probably. Do you want wheels? Probably.

Airlines came from the unenviable position where we threw in everything in for one price, and we are now trying to do what many other businesses actually started from, so that you build up the product as you want it. If you stay in a hotel, you don’t get free meals.” But in a hotel you have the option of popping out to McDonald’s or to a five-star restaurant, not easy inflight when confronted with expensive junk snacks.

U.S. carriers claim that ancillary charges help keep ticket prices low, but the quality Asian carriers manage to supply all the frills as well as the essentials of a checked bag, food and drink without charging more. Americans are increasingly resentful of the policy of pay-pay-pay-and-pay-more, but despite its boast as being the world’s freest economy, the U.S. is highly protectionist against foreign competition: Foreigners are limited to a 25 percent stake in a U.S. carrier.

It will be interesting to see if Thai Airways will be able to regain the top tier in the airlines industry and whether Japan will join the U.S. charging game. — K.R.


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