Multi-pronged strategy for Thai as it looks to develop business

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Thai Airways (TG) International is pressing on with multi-pronged plans to further develop its cargo operations, senior officials have said, writes Michael Mackey.

The strategy starts from the ground up, Thai’s managing director of cargo and mail department, Dumrungchai Sawangcharoen (pictured above) told reporters on the inaugural flight of Thai’s new Airbus A350-XWB from Toulouse.

The new aircraft will not bring much extra capacity to TG – very much in keeping with THAI’s overall strategy.

Among the upgrades planned is one to acquire Good Distribution Practices (GDP) certification for pharmaceuticals which it expects to have by the end of 2018, Sawangcharoen said. The hope is this will strengthen both TG’s postion as carrier of value-added products, but also Bangkok Suvarnabhumi Airport’s (SBIA) as a hub.

This links to improvements currently being put in place at its three cargo terminals at Suvarnabhumi, Chiang Mai and Phuket.

“We are focusing on HR such as training and improving working space environment in our warehouse at SBIA,” said Sawangcharoen. Line management, he added later, will make Suvarnbhumi, a more efficient hub.

Another development it follows up on is more, and better, use of information technology. Efficient revenue management, via web-based tech is a key part of this. Thai introduced a new IT system including a mobile app back in 2015 which gives it “more message earlier” as Sawangcharoen put it.

This has helped with the bottom line, but not fundamentally recast Thai as a cargo carrier – something that is unlikely to change in the future as well.

“We have been profitable, coming back from 1.3 billion baht ($39 million) loss in 2014 by the end of 2016 we record 2.8 billion baht of profit. The revenue contribution from cargo department is approximately 13 per cent of the corporation’s total revenue,” Sawangcharoen said.

This has been done by Thai moving only a small amount more of cargo as the carrier was helped by jet fuel prices. This year for the January to July period it has already shipped 253,842 tonnes and is expecting a year-end total of between 435,000 tonnes and 450,000 tonnes, or growth of three to four percent.

In turn this is consistent with the previous year when Thai moved 419,477 tonnes, approximately three per cent more than in 2015.

Also consistent is what it moves. This ranges from machinery, household goods, industrial equipment and products, perishables to special cargoes such as live animals, dangerous goods and valuables.

This is similar to its competitors as explained by Etihad Cargo senior vice president, David Kerr (pictured): “We predominantly transport general cargo comprising electronics, household appliances, automotive parts, and garments and shoes; perishables; valuable cargo; live animals and airmail.”

What Thai is also seeing and here the consistency is with other countries as well as its own track record is some “slight changes on cargo commodities,” as Sawangcharoen put it.

As manufacturing has shifted out of Thailand into other countries in upper Southeast Asia, Vietnam being a good example, but Cambodia as well deserves a mention, Thai has noticed “the import of machineries and industrial equipment has decreased. The export of garments and fabrics has also shrunk,” said Sawangcharoen.

Offsetting this, Thai like every other carrier on the planet is noticing “IT goods and supplies, including e-commerce items have been growing especially on the import sector.”

Again this has been confirmed by other carriers’ with Etihad’s Kerr reporting it was “seeing shifts in consumer patterns towards e-commerce. We are currently developing plans for the huge growth expected in this area.”

Etihad also has identified two other opportunities which fit with Thai’s plans. “We see development opportunities in the perishables sector and are focusing on developing this business with local partners and multinationals,” said Kerr.

“We have also seen growth in electronics and automotive segments, particularly into the European Union.”

None of this is likely to force Thai’s plans to either offload its two freighters, “We are parking Boeing 747-400BCFs for economic reasons,” Sawangcharoen said, or step up new acquisitions.

Thai has 78 widebody aircraft and will have 81 by the end of the year.

According to other officials within the carrier, this is enough. There are no plans to expand the roster of destinations, which costs time and money, said one senior official.

Thai buys new aircraft to replace its old fleet as passengers, unlike cargo, complain about interiors and entertainment and the carrier needs to think more on issues such as fuel efficiency and emissions.