Thai Airways International Ltd.
Thai Airways International Ltd.
State-Owned Company (80%)
Incorporated: 1947 as Thai Airways Ltd.
Sales: B 51.94 billion (US$2.05 billion)
Stock Exchanges: Bangkok
Thai Airways International, Thailand’s state-owned airline, is one of the most influential companies in that emerging Asian country. It is an example of the growing success and significance of Asian national carriers, which have carved a niche in ferrying industrial goods from the Far East to Western markets and in serving Western business and leisure travelers. Thailand’s growing prosperity in the 1990s underlined how mastery of the skies can carry a remote and relatively small country into the global economy.
Airplanes were seen over the Thai capital of Bangkok as early as 1911, but it was not until 1947 that the government of Thailand established a national airline of its own, Thai Airways Company. The country had recognized a need for such an airline network during post-World War II reconstruction. Until then, rivers and canals had been the traditional mode of transportation. The postwar years saw these replaced by highways and roads as main transport arteries, and the aviation industry developing worldwide at the time not surprisingly also had an impact on Thailand.
The original Thai Airways Company was a modest affair—3 DC-6 prop-jets; each had 70 seats. Thai Airways” first head office in Bangkok was situated on New Road, directly across from the main post office. From these headquarters passengers could purchase tickets to nine domestic destinations, including the jungle resorts of Chiang Mai in the North, Lampang, in the center of the country, and the pristine beaches of Hat Yai to the south.
In 1954 the Thai government identified 130 airfields throughout the country, 104 of which were functional. Thailand’s main airport was Don Maung, outside Bangkok. Thai Airways expanded abroad in 1959 with the help of Scandinavian airline SAS, which assumed a 30 percent shareholding in a new subsidiary, Thai Airways International Ltd. SAS brought technical and managerial expertise and its old propeller planes to the fledgling national carrier; in return, SAS was awarded landing rights in Hong Kong.
83,000 passengers were carried to nine Asian destinations in 1960, the first year of Thai’s service. Routes included those from Bangkok to Calcutta, India, via Rangoon, Burma; Bangkok to Tokyo via Hong Kong and Taipei, Taiwan; and flights to Phnom Penh, Cambodia; Saigon, Vietnam; Kuala Lumpur, Malaysia; and Singapore. The airline’s staff numbered 477. That year its pilots flew a total of 8,147 hours.
Thai owed much then, as now, to its unique location. At the crossroads between East and West, North and South, Thailand is a sought-after stopover on numerous flights by airlines from around the world, a situation that has afforded the airline considerable leverage in securing reciprocal landing rights in European and North American airports. Even in the 1990s, Thai remained in a strong bargaining position: long-range jumbo jets flying from Europe to Asia may skip India or the Middle East on their way to Australia, but they need to refuel in either Bangkok or its rival Singapore.
1964 Thai added a Caravelle SE-210 jet aircraft to its fleet, which allowed the first scheduled service to Osaka, Japan; Kathmandu, Nepal; and Bali, Indonesia. The aircraft was able to fly between Bangkok and Hong Kong without refuelling. It carried 72 passengers and had a take-off weight of 48 tons. This meant it could carry a payload of 10 tons and would burn off three tons of fuel each hour in the air.
By the mid-1960s Thailand had become a tourist destination for Westerners traveling in Asia. The lure of the Orient was clear to Thai’s founders; they recognized that the development of the company’s regional route network would depend on access to tourist destinations both in Thailand and throughout Asia. The airline did its best to promote these locales, investing in advertising and public relations. Colorful pamphlets encouraged tour operators and travel writers to visit Asian resorts, and word of mouth in turn inspired other wayfarers to make the trip.
In 1969 the company entered the packaged holiday market with Royal Orchid Holidays, offering the flexibility of individually planned tour itineraries combined with the cost savings usually found only in large group tours. Thai did not, however, want to replace the travel agent, who traditionally sold tours to travelers; nor did it wish to replace tour operators in the field, who looked after travelers once they arrived at each of their tour destinations. Instead, Thai operated as the middleman, bringing travelers and tour operators together, thus putting more people on its planes. By 1972 Thai was ranked 44th among the world’s international airlines, one place behind rival Philippine Airlines.
To emphasize the romance of the Orient, Thai’s air hostesses began wearing traditional Thai silk costumes. Western airlines had been known to criticize their Asian counterparts for exploitation of their hostesses, who, it was charged, were required to maintain a submissive role—traditional in some Asian cultures—in order to offer what the airline perceived as first-rate cabin service. Although space limitations in cabins prohibited traditional costumes by the 1990s, by which time hostesses had switched to more comfortable two-piece silk uniforms, the philosophy persisted. In October 1991 airline president Kaset Rojananil announced a change in hiring policy at the airline: an applicant’s physical beauty would be weighed before her educational qualifications. “Intelligent women tend not to be good-looking,” he noted, according to Asiaweek. Kaset, also a military general and member of the junta then ruling Thailand, maintained that applicants should be screened “the way beauty pageant judging panels select contestants.”
Beginning in the late 1960s, Thai also benefitted greatly from Asians increasingly traveling to the West. Despite the twin oil shocks of the 1970s, the number of Asians traveling to the West grew by an average of 17 percent a year during the decade—the airline carried 1.31 million passengers to 26 destinations in 1976 alone. By the mid 1970s, Thai’s staff had grown to 4,631, making the airline one of the nation’s largest employers. Vacancies for cabin hostesses and stewards routinely elicited thousands of inquiries. The 1981-82 world recession, however, had a dampening effect, bringing growth in passenger numbers down to 10 percent during those years. Passenger traffic to Asia was encouraged, though, by the success of James Clavell’s popular novel Shogun and the completion of the Tokyo Disneyland, which attracted six million visitors in its first six months of business, in 1981.
As a state-owned airline, Thai is also charged with flying the national flag and acting as an overseas ambassador for Thailand. This includes sponsoring leading Thai artists appearing overseas, including musicians and classical dance troupes. Beginning in the 1970s, the growing airline also began supporting community efforts in the region. In 1979, for example, the airline initiated the Asian SAE Write Awards to promote Asian literature.
Aside from establishing international good will, these efforts sent a message to Thai competitors that the airline would pursue every avenue to establish dominance in the region. American airlines like Northwest Orient, Pan American, and United also expanded into Asia in the 1970s. Regional rivals Singapore Airlines, Philippine Airlines, and Japan Air Lines Co., which were government-owned, were also competing ferociously for market share in the key corridor between London and Sydney and on the Bangkok-Tokyo route.
In 1975 the national carrier made another bid toward modernization when it changed its quaint logo—a dancer in classical dress silhouetted behind lettering that spelled out the word “Thai”—to a distinctive purple and gold symbol approximating the graceful curves of an orchid.
Part of Thai’s success has always been attributed to the quality of its in-flight meals. By the early 1990s Thai’s flight kitchen at Don Maung Airport catered to 44 international airlines stopping over in Bangkok. In 1980 the airline established Air Lanka Catering Services Ltd., a 50-50 joint venture with Air Lanka to develop and operate a modern flight kitchen in Colombo, Sri Lanka. A decade later, Thai established Phuket Air Catering Co. Ltd., in which it holds a 25 percent stake in partnership with the Phuket Pearl Hotel. The facility serves 2,500 meals daily to flights moving through Phuket, in southern Thailand.
Another extension of the airline is its supply of aviation fuel. In 1983 Thai established Bangkok Aviation Fuel Services Ltd. (BAFS) at Don Maung Airport. The carrier took a 32 percent stake of BAFS, which operates from a depot near the airport that houses storage tanks containing 51 million liters of jet fuel. Underground pipes from the depot to aircraft parking bays carry the fuel to customers. As an offshoot of BAFS, Thai in 1990 launched Fuel Pipeline Transportation Ltd. in partnership with Thailand’s state-owned oil enterprises and various multinational oil companies. The aim of the new company was to improve fuel distribution by constructing a 68-kilometer pipeline from the oil refinery and depot at Bangchak and Chongnonsee, in Bangkok’s dock area, to Don Maung Airport.
Thai has also made inroads into the hotel business. In 1983 it obtained a 24 percent stake in the 775-room Royal Orchid K Hotel in central Bangkok. It also maintains a 40 percent stake in the 440-room Bangkok Airport Hotel, which is adjacent to Don Maung Airport.
Cargo is also another key element of the airline’s business. In 1985 the carrier built a 14-acre “Cargo Village,” in which goods scheduled for shipment to Europe, North America, and other parts of Asia are stored. Thai can carry up to 700 tons of cargo on flights to any of its 13 European destinations. The airline’s boast is that fresh orchids and popular tropical fruits like rambutan and pineapple can be delivered to Don Maung Airport late in the afternoon and appear on store shelves in London or Paris the following afternoon. Cargo growth has significantly fueled revenue for Thai. The airline recorded revenues of B 12.6 million in 1980-81 and B 23.8 million in 1985-86 before posting a record revenue base of B 51.9 million in 1990-91.
Products for export, including textiles, VCRs, fashion products, and high-tech manufacturing tools—are also being increasingly shipped to global destinations by Thai flights. The importance of such flights grows as companies worldwide adopt just-in-time inventory control.
By 1990 Thai was carrying just over 8.1 million passengers yearly and counted a staff of 18,272. The carrier’s pilots flew 143,032 hours that year on 60 jet aircraft. The fleet included four 747-400 jets and six 747-200 jets. In testament to its growing importance in Thai society, the airline began hosting a number of national events. In 1991 these included Bangkok’s bicentennial celebrations, Visit Thailand Year, and Arts & Crafts Year. 1992 saw Thai host Thailand’s National Heritage Year. Among the sports events the company began sponsoring annually were the Professional Golf Association’s Thai Open and Ladies’ Open. The airline also hosts a number of international tennis competitions.
With an eye toward future growth, Bangkok planned to build a new airport at Don Maung scheduled to open in 2000, when more than 20 million travelers were expected. This venture called for massive investment, including 27 new jet aircraft between 1992 and 1996. Thai’s staff in this period was expected to increase from roughly 18,000 to 30,000 employees. To fund this expansion, the airline announced in January 1992 that it would list 20 percent ownership of the company on the Bangkok Stock Exchange. By turning to the private sector, Thai Airways International signaled a move away from full state control—a direction mirrored in the early 1990s across the airline industry as alliances and mergers between competing airlines proliferated.
The stock market flotation boded well for Thai Airways International’s future. Thailand stands at the crossroads of Asia; if, as commentators speculate, that region of the world becomes the economic powerhouse of the next century, Thai Airways will almost certainly become a central focus of that development.
Air Lanka Catering Services Ltd. (40%); Bangkok Airport Hotel (40%); Bangkok Aviation Fuel Services Ltd. (32%); Fuel Pipeline Transportation Ltd. (10%); Phuket Air Catering Co. Ltd. (25%); Royal Orchid Sheraton Hotel (24%)
Thai Airways International#x2014;32nd Anniversary, Bangkok, Thai Airways Public Relations, 1992; “Thais Approve New 777 Trent Order,” Flight International, February 11, 1992; “Have A Pleasant Flight,” Asia-Week, October 11, 1991.