This year, Thai Airways International was to celebrate its 60th anniversary. But instead of champagne and the grand ballroom, it’s dismay and the Central Bankruptcy Court.
Here’s the story of what used to be our country’s premier organization.
The origin of Thai Airways
In 1959, the Thai government created the Thai Airways Company (TAC) “เดินอากาศไทย” as our national carrier.
It was a merger between Siamese Airways and Pacific Overseas Airline (Siam), serving airports within Thailand and some key cities in neighboring countries, such as Vientiane and Penang.
The airline flew under the slogan “just a nap, you’ll be there”.
In 1960, the government authorized TAC to create an international subsidiary under the name Thai Airways International (TG) “การบินไทย”. It was jointly owned by the government (through TAC) and the Scandinavian Airlines System (SAS).
SAS provided the subsidiary with expertise in areas such as operations, marketing and training. The airline took its first flight to Hong Kong and expanded its network to Australia (1971), Europe (1972) and the USA (1980).
In early 1977, SAS sold all its shares in TG to the Ministry of Finance, thus ceasing a 17-year joint venture partnership. Although the two airlines to this day still maintain a special relationship.
In the 1980s, General Prem Tinsulanonda’s government had a vision of a single, unified national carrier, and decided to merge TAC with TG. TAC then transferred its regional airline business to Thai Airways International.
Smooth as silk
Thai Airways International, the sole national carrier of Thailand, became the face for the country.
On every flight, it flew the Thai culture, cuisine and identity with it. A lilac-colored orchid is handed to all passengers regardless of service class. The interior walls of the aircraft are printed with the silhouette of Bangkok’s skyline. The silky national dress of the flight attendants are for during flights only. They wear it in the air, never on the ground.
In 1991, the Anand Panyarachun Government, wishing to let TG grow as an independent state enterprise, listed TG’s shares on the Stock Exchange of Thailand (SET). Its share capital at that time went up six-fold in the process, making it the SET’s largest listing.
The year 1997 was a milestone for TG, as it became the only Asian airline of the five founding members of Star Alliance, the first global airline alliance, hence its five-pointed star logo.
Its staff, which has an assumed duty of being the face of the nation to the world, while being a state employee, enjoys numerous benefits that exceed any other state workers in the country.
The benefits include job protection through the State Enterprise Labor Relations Act. As well, the company subsidizes the income tax for employees. They also enjoy high salaries and free flights for them and their family members.
It’s no wonder, TG’s employees are proud of their company and of their status. Perhaps, this was justified, because TG was that good.
It was up there as one of the world’s top airlines.
Then came “he” who must not be named
In less than a month after entering office in 2001, Thaksin Shinawatra, the then prime minister of Thailand, was about to board flight TG113 bound for Chiang Mai.
The plane caught on fire and there was an explosion, killing one TG staff, who was on the aircraft in preparation for the flight.
The flight was due to carry many government VIPs, including Thaksin and his son, Panthongtae. There was a two-hour flight delay, which perhaps saved them.
Despite speculations that this was an attempted assassination, the government along with the US National Transportation Safety Board (NTSB) concluded that the TG113 explosion was a result of faulty equipment.
In that same year, the Thaksin Government struck bilateral deals with many countries on the “open sky policy,” which effectively made Thailand one of the world’s most liberal air spaces. This policy allowed carriers from signatory countries almost unlimited access to the nation’s principal gateway airports.
The policy enabled competition, which benefited the consumers, but not TG. The airline had to continuously reduce its domestic routes, or hand over services to its sister airline, Thai Smile.
So if you wonder why Thai Airways workers’ union (TG Union) blamed Thaksin for the airline’s downfall, now you know. Monopolies hate competitions.
The sky opened for Thaksin
The open sky policy back then also enabled the birth of hybrid-nationality low-cost carriers such as Thai AirAsia, which was founded with Shin Corp holding 51% of the stake. Shin Corp was of course owned by Thaksin’s family members and allies.
So again, TG Union has no love for Thaksin.
The US and Thailand signed the open sky deal in 2005, the same year that TG launched one of the world’s longest non-stop flights between Bangkok and New York. Furthermore, to pursue expansion in continental USA, TG purchased nine Airbus A340 aircrafts.
But this was proven to be a wrong decision for TG, as well as other airlines that pursued ultra-long routes.
These flights were often too expensive to operate, given the fuel price at the time. Even if you could fill the entire aircraft, the airline would still lose money. Singapore Airlines, which launched a similar service direct to New York, ended up cancelling the service. TG stopped flying direct to New York in 2008.
The nine A340 aircrafts were left parked at U-tapao Airport since then. Until TG found a buyer for them in 2019.
Despite tougher times ahead, TG was awarded the title World’s Second Best Airline of 2007 by Skytrax, one of the industry’s most respected airline consultancies. Its financial performance was also excellent, managing to be mostly profitable during 2002-2010.
Involvement in politics
In August 2008, TG Union led by Jamsri Sukchotirat, encouraged airline staff to take leave to support the anti-government movement by the People’s Alliance for Democracy (PAD), also known as the “yellow shirts”.
The PAD was protesting against the Thaksin-nominee People’s Power Party Government.
Ever since then, the TG Union has been relatively active in associating Thai Airways with its political agenda. Critics have alleged that the TG Union had a hand in the seizure of Bangkok’s two major airports in 2008 by the yellow shirts.
TG staff appeared on the PAD’s stage and spoke about denying government members from flying on Thai Airways. Some went as far as saying that the airline would never welcome “red shirts” onboard. Red shirts were members of the pro-Thaksin movement, United Front for Democracy against Dictatorship (UDD).
The last significant involvement the TG Union had in Thai politics was in 2014, when it staged a big welcome ceremony at TG’s headquarters for Suthep Thaugsuban and the People’s Democratic Reform Committee (PDRC), which protested against the Pheu Thai Government, with Thaksin’s sister, Yingluck, as prime minister.
Its goal was simple: refuse TG reform, put an end to politicians’ interference in TG and “eradicate” Thaksin and his people from the country.
The wrong move
Thai Airways has consistently reported loss since 2013. It was probably the only airline that didn’t reap the benefits from Thailand’s tourism boom that saw record numbers of arrivals.
Although much of the loss could be attributed to its internal issues, such as mismanagement, nepotism and corruption, competition was also fierce.
The big-three from the Middle East (the ME3) — Emirates, Qatar and Etihad — made Bangkok their “focus city,” linking it with their hubs and operating at least two flights daily.
On the domestic end, TG lost much of its market share to low-cost carriers such as Thai Air Asia.
Airline management at the time (appointed by the Yingluck Government) concluded that the company, inevitably, had to enter the low-cost segment. The rationality was that Thailand isn’t a business destination, but a leisure one, making it challenging to maintain profitability while operating only in the premium segment.
In 2012, after numerous attempts to enter the low-cost market (whether through its significant stake in Nok Air, or a failed joint-venture with Singapore Airlines to create Thai Tiger Airways), it founded Thai Smile Airways.
The Yingluck appointed management team’s goal was to show TG and its staff “how it’s done”.
The management wanted Thai Smile to achieve profitability within a short period. In the process, TG had to give up many of its domestic and regional destinations to Thai Smile, which of course did not sit well with TG Union.
But instead, Thai Smile became another loss-making carrier.
So again, the TG Union is no fan of the Shinawatra family.
Road to Bankruptcy
TG still enjoys praises from its passengers. It won numerous awards and ranked as the world’s 10th Best Airline by Skytrax for 2019. But the airline just couldn’t turn itself around financially.
Sumeth Damrongchaitham, appointed in 2018 as airline president, resigned abruptly in March 2020, citing that “those in power” told him that his mission was over.
Two months and a COVID-19 crisis later, the face of Thailand now faces the Central Bankruptcy Court.