Thai Airways' Turnaround a Blueprint for State Enterprise Reform, TDRI Says
A leading think tank highlights the airline's successful restructure, arguing its revival was only possible after the government reduced its hands-on role
- The Thailand Development Research Institute (TDRI) presents Thai Airways' successful turnaround as a blueprint for reforming other state-owned enterprises.
- The recovery was driven by comprehensive financial and organizational restructuring, which was only possible after the government reduced its majority shareholding, thus limiting political interference.
- The TDRI concludes that the key lesson for state enterprise reform is for the government to adopt a "hands-off" approach, allowing for professional management and operational flexibility to drive efficiency.
Thailand's Development Research Institute (TDRI) has cited the remarkable turnaround of Thai Airways International (THAI) as a crucial case study, arguing that the public sector must step back from intervening in state enterprises.
According to the think tank, THAI's revival proves that a hands-off approach is key to driving reform and national progress.
Dr Somkiat Tangkitvanich, the TDRI's president, said in a television programme on 11th August that THAI's recovery offers hope for the entire country.
He explained that the airline’s deep-seated problems pre-dated the COVID-19 pandemic, with its status as a state enterprise being the primary cause. This led to a slow, bureaucratic organisation that was susceptible to political interference, which resulted in a host of issues.
Among the core problems were inappropriate procurement processes, overpaying for goods, and a fleet of too many different aircraft and engine types, which made management and maintenance both difficult and costly.
Its status as a state enterprise also made it legally challenging to dismiss underperforming staff, leading to a mix of diligent and unmotivated employees.
Dr Somkiat identified two main factors behind the airline's successful recovery: comprehensive financial and organisational restructuring.
The financial overhaul included debt extensions, converting some debt into equity, and selling off assets.
The organisational reforms made the company leaner and more responsive to passenger needs, while also reforming procurement and eliminating brokers in aircraft purchasing.
Crucially, Dr Somkiat argued, none of these changes would have been possible if the government had retained its majority stake in the airline.
"The silver lining of this crisis was that the government reduced its shareholding, which gave the airline the flexibility needed for a complete organisational reform," he said.
He contrasted THAI's previous governance with that of a leading competitor, Singapore Airlines, whose board is comprised of top business leaders, multinational executives, and financial experts—individuals with real-world expertise to drive management.
He concluded that THAI's success is a positive sign for the nation, but the key lesson is that government interference and cumbersome regulations can hold back societal development.
Dr Somkiat recommended that the government's role should be to support, not to interfere.
He argued that THAI should be viewed as a "National Flag Carrier" that the nation is proud of, rather than a "National Airline" that the government actively manages. This new, more autonomous role would allow the airline to grow sustainably and unlock its full potential.
