The State Enterprise Policy Commission, or so-called superboard, yesterday approved the new aircraft purchase plan of Thai Airways International Plc (THAI), but it remained non-committal on the number of new jets.
Deputy Prime Minister Somkid Jatusripitak said THAI needs to buy new aircraft if it wants to become a national premium airline in line with its ambitious plan.
"The airline industry faces fierce competition," he said. "To stay competitive, THAI needs to come up with a perfect performance in three areas: aircraft, good services such as food, and a good network."
However, Mr Somkid said THAI needs to have a clear-cut action plan on how to become a national premium airline and report its strategic plan to him on Sept 20.
"THAI plays a key role in developing the country's domestic tourism and second-tier tourism provinces," he said. "It thus desperately needs to improve its performance in efficiency of aircraft, food quality and services, and network among alliances both domestically and abroad."
Mr Somkid insisted that finance is not a key area of concern for THAI in buying the new aircraft, saying the government is willing to back up the purchase plan financially.
"The National Economic and Social Development Board [NESDB] hasn't prohibit THAI from purchasing the new aircraft," he said. "The planning unit just expressed its concerns about the financial status of THAI."
The NESDB recently asked THAI to reconsider its five-year business plan to buy 23 new aircraft worth about 100 billion baht, citing concerns over its financial status and fierce market competition.
THAI is one of six financially ailing state firms that have undertaken business rehabilitation as required by the commission. The others are the State Railway of Thailand, the Bangkok Mass Transit Authority, TOT Plc, CAT Telecom and the Islamic Bank of Thailand.
Nonetheless, Mr Somkid yesterday declined to specify the exact number of new aircraft THAI will purchase during 2018-22, saying only that this depends on the routes and strategic plans of the carrier.
Finance Minister Apisak Tantivorawong said the NESDB and Finance Ministry have no plans to suspend THAI's planned purchase of new aircraft.
The government think tank just needs to thoroughly consider details of the national carrier's expenses and income, Mr Apisak said.
The purchase of the aircraft is crucial for THAI and is in line with the airline's plan to move towards becoming a national premium airline, he said.
Without new aircraft, THAI risks losing customers to competitors, he said, and maintenance costs for existing aeroplanes are normally higher than for new ones.
Transport Minister Arkhom Termpittayapaisith said the national carrier needs to buy new aircraft to compensate for its decommissioned ones, adding that the state planning unit just asked for more information for THAI's new aircraft purchase plan.
He insisted that the national carrier still needs to procure 23 new aircraft to replace 23 old ones that will be decommissioned.
Charnwit Nakburi, deputy director-general of the State Enterprise Policy Office (Sepo), said the national carrier is required to improve its performance to achieve national premium airline status, strengthen its financial position and team up with as many business alliances as possible, including PTT Plc, Airports of Thailand and Krung Thai Bank.
"THAI is expected to achieve its revenue target this year as planned, but key risks are higher oil prices and the exchange rate," Mr Charnwit said.
In a related development, the superboard yesterday acknowledged the proposal of the Digital Economy and Society Ministry to merge TOT Plc and CAT Telecom Plc and approved the establishment of a panel to handle the merger of the two state enterprises. Details of the merger plan should be complete by November.
