THAI controls costs
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Bangkok, Thailand. 23 November, 2009 (TravMedia.com): Thai Airways International Public Company Limited has reduced its non-fuel expenses for the first three quarters of 2009 (January 1 -September 30, 2009) by THB 10,300 million. The Company has set a goal of THB 11,840 million in cost reductions this year.
Mr. Piyasvasti Amranand, THAI’s President, said that through hard work the reductions came from various measures under THAI’s Cost Reduction Measures. The Company expects to achieve THB 11,840 million or 15% of actual cost reductions in fiscal year 2009. Based on average cost reductions per month, on the first three quarters of 2009 (January - September, 2009), THAI could reduce non-fuel costs by THB 10,300 million. Cost reductions resulted from cutting unnecessary expenses as well as revising work processes to increase productivity and efficiency.
The Company began implementing non-fuel related expenses at the start of the world economic recession that affected the commercial airline industry with a decline in passenger demand, as a means of managing its finances and remain competitive. The cost reductions are in areas that may be reduced without impacting safety, quality, or standards of services. As these reductions succeed in reducing corporate expenses, the Company continues to implement these cost cutting measures.
For the first three quarters of 2009 (January 1 - September 30, 2009), the majority of cost reductions were achieved through areas such as personnel-related expenses, flight crew and cabin crew costs, marketing, sales, advertising, leases on aircraft, engines, and spare parts as follows:
? Personnel-related expense reduced by 12.5% from last year
? Overtime reduced by 47.7% from last year
? Flight crew and cabin crew expense reduced by 26 % from last year
? Administration expenses reduced by 19.0% from last year
? Sales & Advertising expense reduced by 19.3% from last year
? Flight operational expense reduced by 67% from last year
? Flights service fee (non-fuel expense) reduced by 15.6% from last year
? Aircraft maintenances reduced by 21.5% from last year
? Rental of aircraft and spare parts reduced 63.9% from last year
THAI’s business units implemented the cost reduction measures as follows:
Ground Customer Services Department: The Ground Customer Services Department implemented a reduction of overtime pay, strict control of the investment of both domestic and overseas stations and renegotiated hotel expenses in case of flight irregularities. It is expected that the Ground Customer Services will be able to achieve cost reductions of THB 20.8 million.
Cargo and Mail Commercial Department: The Cargo and Mail Commercial Department improved its operational processes, for example utilizing plastic sheet for better protection of cargo goods, adjustments of overtime, a decrease of promotional expenses, the relocation of offices and the renegotiated of rental space from the Airports of Thailand. It is targeted to achieve a cost reduction of THB 39.8 million.
The Operations Department
The Operations Department negotiated to lower expenditures for crew hotel’s accommodation, during March – September 2009, whereby hotel expenses may be reduced by 37.77% from the same period last year.
The Catering Department
The Catering Department announced bids for the catering services of eight overseas stations in order to create a competitive market. It is targeted to reduce costs by THB 15.32 million.
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