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Thursday, Dec. 30, 2010

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Rebirth: Thai Airways is ranked ninth among the world's airlines according to Skytrax, an industry tracker. KEVIN RAFFERTY

Piyasvasti battles Thai Airways' beasts


Special to The Japan Times

BANGKOK — S ome years ago Thai Airways International ran a beautifully crafted television advertisement featuring a young Thai woman in elegant silk dress who bowed and made a hands-joined "wai" greeting.

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Sky chief: Thai Airways' President Piyasvasti Amranand is tasked with returning the airline to its former glory. KEVIN RAFFERTY

Once upon a time, she began, Thai was a small airline, but it made up for it by its warmth and superior standards. It grew, and here she extended her hands wider and wider as if encompassing the world, to fly big Airbus and Boeing jumbo aircraft to all parts of the world. But, she added, bringing her hands together again to make another wai, the warmth of Thai Airways' welcome remained just the same as it was — in the beginning, and she bowed graciously out.

Something has clearly slipped. Few people now speak of Thai on the same level as Cathay Pacific, Emirates or Singapore Airlines. In the closely followed Skytrax survey, Thai has slipped to four stars, and many frequent travelers think it deserves only three or fewer.

Economy-class passengers on long-haul jumbo flights do not have individual television screens, so they have to crane their necks to watch whatever B movie the airline decided to screen. Service standards are at the mercy of the mood of the crew. Even in first class, fully lie-flat beds are a distant dream, as Thai Airways' President Piyasvasti Amranand admitted in a recent interview.

He exulted in the memory of the luxury of his flight on Singapore Airlines from Singapore to London: "That was very enjoyable. The best part was really the bed, first class; the service and food were OK, not all that different from Thai Airways. The difference was the first-class cabin on the A380. The nice thing is the bed, which comes right down so you have a real bed to sleep on. There are more films to choose from but that will also be the case on Thai Airways soon." Then he repeated, "The bed is the thing that is really nice." (One might add that at $6,600 one way, it is a pretty price to pay for a good night's sleep.)

Thai Airways will get its own Airbus A380 super jumbos soon, but they were ordered without lie-flat beds, so Piyasvasti says the luxury will have to wait until 2014 or later. This small aspect illustrates the difficulties that he faces in trying to restore the reputation of Thailand's flag carrier: Turning around an airline takes longer than turning an aircraft carrier or supertanker.

After just over a year on the job, the new president has been setting a fast pace. He was able to celebrate Thai's 50th anniversary this year with the company in the black. In 2008, Thai lost 21.5 billion baht, but it returned to profit of 7.3 billion baht last year and has continued its profitable journey recording a net profit of 12.4 billion baht in the first nine months of 2010.

He is busy trying to cut costs, to simplify the airline's fleet, as well as catching up with rivals by providing better onboard services. He has also raised new funds to lower the airline's debt to equity ratio from about 3-to-1 to about 1.5-to-1. Even more demanding, he wants to change the corporate culture to get rid of the corruption that has bedeviled the carrier for years.

On the management floor inside the airline's headquarters, Piyasvasti is winning golden opinions, which is a little surprising because he is only the second outsider to run Thai Airways and the previous person was given a hard time. "He did not know the airline; he had a lot to learn," said one of the previous president's personal assistants.

Piyasvasti is of tougher stuff. After gaining a first class degree in math from Oxford University, he earned a Ph.D. in economics from the London School of Economics. "You learn how to think, that's the important thing," he says of his time at Oxford.

He returned to Thailand and joined the government bureaucracy where he had a distinguished career in dealing with planning, energy, privatization, macroeconomics, public relations and banking.

He left the bureaucracy to head the asset management arm of one of Thailand's biggest banks, but returned to government as energy minister in 2006 after the bloodless coup that ousted controversial billionaire Thaksin Shinawatra as prime minister.

His long career in government taught Piyasvasti a lot about management, "and also politics," he adds. He smiles frequently but is not relaxed, so his expression comes out like a grim grin.

But running an airline is a tough business. As Piyasvasti puts it, everyone who flies thinks they know how to run an airline. "People anywhere in any country typically have strong opinions about their national airline."

In addition, Thai Airways is not only the national flag carrier and quoted on the stock market, but also is majority-owned by the government, which has traditionally led to interference from all quarters.

Piyasvasti can't say he wasn't warned. "So many people came along and said, 'You don't know what you are getting into. People here are terrifying. There is so much interference, and people are full of. . .' " He hesitates over the Thai words "seur" (tiger), "singha" (lion), "kra ting" (wild buffalo) and "raed" (rhinoceros), meaning big powerful beasts that have their domain, power and connections.

So it is surprising when Piyasvasti compliments the Thai staff; it's almost as if he is enjoying a lovefest. "The quality of people here is very excellent. I have spent a long time in government, the civil service, and I can tell you that the quality of people in the civil service and in other state enterprises is a lot lower than what we have here. The quality here is really world class," he says.

So why is there the erroneous impression of infighting, corruption and nepotism running rampant through the airline? Piyasvasti blames it squarely on "the interference from outside, not because of the people here. The people here are actually very good. The only problem is that they have not been allowed to do what they really wanted to do because there has been so much interference from outside."

A few months into running the airline, Piyasvasti was offered the governorship of the Bank of Thailand — and promptly turned it down. "There are many people who are capable of becoming governor of the Bank of Thailand, and being governor of the central bank is easier than being here," Piyasvasti says. "It would be ridiculous to come here for less than a year and then leave. There is enormous value in this company and if you can really unlock it, that would be very beneficial to the company and for the country."

Despite his praise of the airline's staff, Piyasvasti says there is a long way to go to improve the company: "The most difficult task will be the issue of governance, basically the ethical balance of people here. Unless I am able to change the culture, the governance, this company will not be able to survive in the long run. That is the main problem. You can get some new planes. You can make the seats nice by retrofitting the existing planes. You can improve the meals, the services and so on. But all these things would not last unless you are able to change the culture of the people in this company."

He is optimistic on dealing with the issues of culture, nepotism and outside interference. "On procurement process, on appointment of key staff, that was a problem in the past, is still a problem to a certain extent but I think it is a lot better now. That has weakened the company very substantially and demoralized totally capable people."

Asked if he means interference by factions or by the government, he replies, "Interference by outsiders, everybody. I was able to get them (the government) to change rules and regulations to ensure that I would not be facing similar environment as in the past. A promise is not enough: You have to change regulations."

Keeping up a furious pace Piyasvasti offers his own report card: "We came up with a strategic plan, with nine measures, and we have started to implement all of them, and in many cases we have made enormous progress — everything from strategic positioning of the airline, improvement of product quality and services, improving the network, improving the fleet of the airline, changing the structure of how you manage and run the company, increasing competitiveness of the company, human resources management as well as the financial health of the company."

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