Suggestions for Related Organizations

Suggestions for Thai Low Cost Airlines

Because of the rapid growth and intense competition of low cost airlines in Thailand, Thai low cost airlines need to develop themselves so as to gain the competitive advantage and be the first choice of low cost airlines for passengers.

Basing on the results of this study, we propose the following suggestions for Thai low cost airlines:

1. Price

Thai low cost airlines should concentrate on attractive pricing strategy such as, the first come with lowest price, one price strategy, and period of discounted, ladder-like manner price that many successful Thai low cost airlines have thoroughly presented (Anuchatanon et al., 2013).

Focus on targeted groups, for example, offering lower price ticket for women since in our study women are the main travelling group of air transportation. As well as, passengers in the government sector, they are concerned as the most frequently fliers. Besides, the student

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group, who should be not overlooked because they do not only book the trips for studying, but also go back home to visit family each year. Moreover, in term of “flash-packer” group, the hi-technology and socially connected travelers, is becoming a new target of the travelling market, who are concerned as a growing segment of the global travel industry (ITB, 2014).

Therefore, this targeted group may give a change for Thai low cost airlines to gain more market share.

In addition, according to the data from TAT (Tourism Authority of Thailand) and NSO (National Statistical Office of Thailand, 2015) indicate that Thai people like to make a domestic journey and this allows Thai low cost airlines to make a price strategy which let Thai travelers control their expenditure to meet their demands. The cost of travelling should be approximately 2,600 THB for one time per person. For example, offer special price on the routes that enable them to reach beautiful tourist destinations in Thailand.

Aside from local Thai citizens, foreigners, particularly, in East Asia, such as Chinese, Malaysian, and Korean people like to have a trip to Thailand as well (MOTS, 2015).

Therefore, the concept of airline alliance may bring benefits to Thai low cost airlines, since the alliance would increase competition advantages in the international market by allowing the lower price, and providing the variety of routes. However, Thai low cost airlines should not use overcharging strategy that exploits the passengers which will causes passengers dissatisfaction in the long run (Pothasin et al., 2010).

2. Punctuality

Thai low cost airlines need to increase the number of auxiliary aircrafts, since unscheduled maintenance reduces aircraft availability rates, and results in affecting the punctuality performance of airline. It is important to deploy them cautiously and not in a sweeping fashion. Avoid the tendency to simply use them as a buffer for maintenance requirements.

To solve the delayed flight caused by traffic congestion requires the airlines explore new ways to share the air-space, co-location, either in concerted actions with other airlines, air traffic providers, ATC, as well as airport operators who are responsible for slot allocation.

Slot allocation is the management on scheduled times of arrival or departure, or the aircraft movement, on a specific date at an airport for delay sensitive traffic support (Allen and Hamilton, 2001; ICAO, Vidhyashankar et al., 2005) Solve the delayed flights is important,

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especially, between the coordinated airports, for example, Suvarnabhumi International Airport and Don Mueang International Airport, which are the two most busiest airports in Thailand (IATA, 2016).

Solving the schedule perturbations problem from the perspective of minimizing customer dissatisfaction is a good opportunity for Thai low cost airlines to improve on time performance. Schedule perturbation management is designed for schedule development, especially caused by the ground delay problem (Luo and Yu, 1998). Schaefer and Nemhauser (2006) indicate that the crew schedule with the perturbed flight timetable can have a noticeable punctuality improvement than the original flight timetable. Schedule perturbation management does not only enhance the on-time percentage that is able to develop the passenger’s satisfaction, but also improve the operational cost, as well as, reduce the loss of profit in rescheduling in competitive airline markets (Yan and Yang, 1996).

3. Safety Record

Low cost airlines try to let aircrafts fly more frequently so as to maximize the utilization of aircraft. However, this kind of operation might cause aircrafts easily weatherworn and lead to aircraft varying load superimposed on a constant load, getting worse from metal fatigue, result in aircraft structural damage eventually (Bhat and Patibandla, 2011).

The data from the Civil Aviation Authority indicate that global jet accident rate is decreasing, that in 2014 was 0.23, which is less than the five-year rate (2009-2013) of 0.58 hull loss accidents per million flights. Moreover, taking airline transportation is the most safety transportation compared to other kinds of transportation since that the fatality rate per billion kilometers travelled by plane is 0.003 compared to 0.27 by rail and 2.57 by car.

Registering and strictly conforming to the global safety standard organization is important, such as take part in IATA Operational Safety Audit (IOSA), IATA Standard Safety Assessment (ISSA), IATA Safety Audit for Ground Operations (ISAGO), and Global Aviation Data Management (GADM), these international organizations will monitor whether airlines are operating to the highest global standards for safety.

Most controlled flight into terrain (CFIT) accidents happen in the approaching and landing phase and are associated with the problem of imprecise approaches. The number of

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CFIT could be reduced by development and enhancement of the training materials guarding against runway excursion accidents.

In addition, Thai low cost airlines must be concerned with safety issue of outsourced maintenance. Before the deregulation of air transportation, airlines conducted their maintenance in-house. After the deregulation, the outsourced maintenance became more prevalent (McFadden and Worrells, 2012).Outsourced maintenance has been a tool that air carriers have used in recent years to reduce costs, improve efficiencies, and hopefully increase profitability (Rutner and Brown, 1999). Especially, in the low cost airline business, an airline with a relatively small fleet may not have the capital or desire, to establish a multi-level maintenance program. However, poor outsourced maintenance might cause ValuJet 592 crashed in 1996 (Gerber and Jensen, 2007). Therefore, Thai low cost airlines should pay much attention on the service quality of outsourced maintenance.

Besides, Thai low cost airline should eliminate the chance of engine failure by introduction digital instrument “glass cockpit”, and “fly-by-wire” technology, which could lead to safety improvements. As well as, improvements in sensors, navigation equipment, and air traffic control technology, such as anti-collision control systems, could play an important role on safety issue.

Pilots not understanding the technical systems in the modern airplanes, and inadequate training appear more times in accident investigation reports. It seems that pilots with inadequate airmanship skills will heavily rely on the autopilot system; it also seems that crews are not trained to ensure that FMS (Flight Management System) should be right before executing them. Therefore, the educated pilots and crews with their knowledge and skills promptly prepare for emergency situations is necessary and this can limit the influence of human errors on flight safety (Soekkha, 1997).

4. Reliability

Thai low cost airlines should demonstrate the commitment to service reliability to all airline employees, by frequent discussion with staffs about reliability, important of striving for zero service error, and every aspects related to service reliability.

Thai low cost airline should establish comprehensive SOP, the Standard Operating Procedure,in training programs and in manuals provided to all airline staffs in order to create

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consistency and reliability service (FAA, 2000). Moreover, SOP is also able to ensure that aircraft is operated in the most safe, efficient, and on-time manner (Giles, 2013).

Moreover, low cost airline should continuously reevaluate service quality and use feedbacks from employees to improve service quality. Low cost airline should have a system in place for systemically capturing and analyzing passenger complaints about the service (Berry and Parasuraman, 1992).

Thai low cost airlines should monitor individual employee service behavior and use the results in coaching, training, performance evaluation, recognition and rewards; identify systemic strengths and weaknesses in customer service. As well as, track employee’s morale and attitudes.

Thai low cost airlines should motivate, and encourage the aim of zero service error, especially in the process of recruiting to guarantee that new staffs are competent and committed to service excellence.

Thai low cost airlines should encourage, facilitate, and require teamwork and communication across functional units. For example, establish passenger-focused inter-functional teams in charge of ensuring the reliable service, foster inter-inter-functional cohesion by implementing formal communication system, and provide programs to cross train employees to help them appreciate one another’s job (Berry and Parasuraman, 1992).

5. Responsiveness

Employee must be competent and possess good attitudes to respond to customers, with problem-solving skill, be creative and able to bring value to the organization of airline (Charoensettasilp and Wu, 2013).

Thai low cost airlines should educate employees on how to deal with angry customers and how to help customers solve service problems quickly. In some cases, they need access to information systems that will tell them more about the passengers, the situation causing the problem, and possible solutions (Leonard et al., 1994). As well as, low cost airline should stimulate staffs to respond customer complaints quickly and personally because quick response demonstrates that the customer's concern is the company's concern. For example, offer the available customer call center for providing advices 24-hours.

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Thai low cost airline should provide sufficient number of backup staffs when key airline staffs are absent (Alberta, 2012). As well as, provide effective cross training staffs, who are able to do more than one task, in order to increase the responsiveness to demand variability and to satisfy Thai passengers with high service quality (Qin and Nembhard, 2005;

Büke et al., 2015).

Besides, Thai low cost airlines should know what passengers really want and whether these meet their needs or not (Fitzsimmons & Fitzsimmons, 2006; Sasser et al., 1978;

Wakefield & Blodgett, 1999), so that low cost airlines can train employees to respond appropriately.

Teamwork cohesion refers to the teamwork attitude and cooperation in cross-departments and the acceptance of different opinions. Management support service responsiveness in internal environment and team work can enhance airline employee cohesion, thus improve passenger service (Deeter-Schmelz and Kennedy, 2003).

6. Flight Availability

Thai low cost airlines should take a consideration on forming airline alliance that it may benefit for flight availability, because airline alliance is able to overcome restrictions over routes by providing a greater network access, increase the flight frequency by offering wider routes and more itinerary choices to passengers than non-alliance airlines of similar size (IATA, 2011). Moreover, it may provide the seamless travel that passengers want when them transferring from one airline to another (Bissessur and Alamdari 1998) since the alliance offers extensive codeshare flight options for its consumers, promising quick transfers, and few stopovers. Besides, if the passengers decide to change flight plans at the last moment, they have the alternative of transferring to a variety of routes, airlines, and flexible flight schedules of the alliance network (Goh and Uncle, 2003).

To minimize the risk of seat unavailability, especially during the high seasons and the promotional periods that the airline tickets will be sold out immediately (Charoensettasilp &

Wu, 2013), by increasing the number of fleet is concerned as one of the choices to sufficiently support such a huge number of passengers for Thai low cost airlines. According to the data from CAPA, 2014, indicates that low cost carriers in Asia-Pacific region operating a combined fleet nearly 1,000 aircrafts, besides, it also orders over 1,500 aircrafts in place. In addition, boosting aircraft capacity could enhance the seat capacity through adding seats on

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existing jets while removing some galley, lavatory and trim legroom, and could balance or cut down the additional expenditures (Carey and Nicas, 2015).

Thai low cost airlines should purchase the airport slot from slot holders, and this is able to improve the network and flight schedules, especially the increasing of flight frequency on existing routes (Babic and Kalic, 2011). From Council Regulation No 95/93, slot is defined as a permission to use the full range of airport infrastructure necessary to operate an air service at a coordinated airport on a specific date and time for the purpose of landing or take-off as allocated by a coordinator at the airport. Therefore, the airline that possesses slot will have the right to operate at that airport at that time (Babic and Kalic, 2011). In the other word, it can explained why the airport in which regard as the slot constrained on the route, results in a drop of nearly one flight per day compared to routes without constrained airports (Pai, 2010).

Presenting the long-haul might be a way to improve the flight availability, especially in term of the extending of destinations for the longer routes (Vermeij, 2014). From the data of Air Travel Intelligence (2015) show that the full service airlines gain 97% of scheduled departing seats on long-haul flights during June 2014 to June 2015, while low cost airline accounting for the remaining 3%. Moreover, full service airlines rule the 10 busiest long-haul routes in the world, while low cost airline only compete on 4 of the 10 routes, particularly, if the route is characterized by a large number of business travelers and frequent flyers who are accustomed to a certain level of service (Perry and Williams, 2015). Long haul low cost airlines could not only select the core prolonged distance, but also have advantages to offer a cheaper airfare, more fuel-efficient aircraft, and higher density seating (Morrell, 2008).

Furthermore, long haul low cost airlines are able to benefit for the connecting passengers who prevail in the short-haul and long haul point to point markets (Shaw, 2011). As a result of the combined application of low cost airline business model with long routes, it is no interlining or transfer for the long distance, but directly to the destination from point to point operation, instead of going through a central hub of the Hub-and-spoke (HS), multi-hub-and-spoke (MHS) from full service airline network configuration (Yan, Fu & Oum, 2008; Lordan, 2013).

Thai low cost airlines should take a notice on the aircraft type selection, in particular, the aircraft providing noise reduction technology (Dickson, 2014). Because some airports restrict the night flights, or curfew, because of the rules imposed by some states on the

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aircraft operators that prohibit the aircraft taking off and/or landing during the specific period of time to reduce the aircraft noise problem (ICAO, 2013). Besides, the night flight restriction may apply to all aircrafts or only a certain aircraft according to their noise performance.

In addition, Thai low cost airlines should have good relation with regional carrier’s owners. Forbes and Lederman (2005) shows that the major airlines that own regional carriers may have a greater ability to dictate flight schedules and aircraft usage than carriers that rely on contract partners. This effect would suggest that major ownership of a regional carrier would allow greater flight frequency and the use of smaller planes (Pai, 2010).

Suggestions for Thai Government

The deregulation and liberalization of airlines industry in ASEAN has stimulated the growth in airline industry recently. Moreover, the rapid growth was driven by an existence of low cost airline, and low cost airline accounts for more than a half of the short-haul market in Southeast Asia (Damuri and Anas, 2005).

Therefore, Thai government should be prompt to assist low cost airlines, since the number of low cost airline passengers in Thailand grows very fast, both in the domestic and international travel (Buaphiban, 2015). Basing on the results of this study, we propose the following suggestions for Thai government.

1. Thai government should alleviate the fee for airport parking, which is considered as the highest fee in Southeast Asia area (Karivate, 2003). As well as, Thai government stop increasing the taxes or charges of low cost airlines for improving the competitiveness in transport and tourism (IATA, 2016).

2. Thai government should encourage the BOI (Board of Investment of Thailand), which has sufficient fund, to subsidize low cost airline business segment for the reliable maintenance operations. As well as authorize the Ministry of Finance of Thailand, in order to provide budgets backing up the extended constructions of transportation direct to airports, since the aviation industry is critical to Thailand’s economic success (IATA, 2016). For example, expand the railway system connecting airports, particularly, a railway connecting Don Mueang International Airport.

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3. Thai government should actively promote the regional tourism industry so as to attract domestic and the international tourists. Especially, attract the group of flash-packer travelers, which is a new market and regarded as a growing segment of the global travel industry.

Tourism industry is a major industry in Thailand; moreover, airline sector in Thailand is concern as the backbone of tourism sector (TRIS, 2014).

4. Thai government should improve on time performance of low cost airlines.

Particularly, improve the management of service supply chain in airports to keep abreast of short turnaround time, by increasing the number of connecting gates and simultaneously improving the allocation of gates, increasing number of boarding bridges, shuttle bus, and transfer bus service from bay to deliver passengers to the airplane, besides, expanding the space of parking lots, increasing the number of baggage claiming belts, allocating the location of check-in counters efficiently, improving the condition of check-in counters and feeding belts, slots, as well as, better congestion management (Klamsaengsai and Choibamroong, 2015).

5. Thai government should develop the ATC, upgrade the air traffic automatically control system and establish the Air Traffic Network Management Centre, with the aim of improving operational efficiency in airspace management, air traffic control and capacity control (HKTDC, Hong Kong Trade Development Council, 2015).

6. Thai government must address the importance of international safety standard under the evaluation of ICAO (International Civil Aviation Organization) and US FAA (Federal Aviation Administration), so as to push Thai low cost airline to meet the world class safety standard. Moreover, by this way Thai government is able to promote the good image of Thai low cost airlines.

7. Thai government should coordinate with foreign organizations, as it will benefit for, especially, in term of the expansion of the airport and its related facilities. Foreign construction and aviation services providers may look after to collaborate with Thai airports and airlines in the supply of related engineering and aviation technologies, equipment, and technical advice to upgrade the nationwide air traffic management system (HKTDC, 2015).

8. Thai government should implement plans for constrained airports to build new infrastructures such as new terminals in order to increase capacity of constrained airports for dealing with a soaring passenger circulation, especially in Don Mueang International Airport

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which has become the world's largest low cost airline’s airport. Furthermore, plan to build new airports. Regulatory barriers to airport expansion should be loosened to encourage more low cost airline players in the airline industry (Karivate, 2003). Besides, Thai government should motivate airports to provide unconstrained slots because routes on which airports are slot constrained and with more competing airports nearby having lower flight frequency (Pai, 2010).

9. Thai government should encourage Thai low cost airlines to enter into alliance with each other as this would increase competitiveness of Thai low cost airlines in the international area beyond domestic front (Sarker et al., 2012).