Can Thai Airways change under its new President?

The appointment of Dr Piyasavsti Amranand– a strong willed and reform minded government insider – as President of Thai Airways International (‘THAI’) marks a potential turning point for a company which has historically been riddled with political infighting, patronage and poor performance compared to its regional peers.

In taking up this post he will be investing his energies in attempting to turn around a company which, as a fund manager, he previously advised his clients not to invest in.

Dr. Piyasvasti Amranand – Thai Airways President


Western educated, Dr. Piyasvasti obtained a Ph.D., from the London School of Economics in 1979, having earlier studied Mathematics and Econometrics at Oxford and LSE (with first class honours from Oxford).

Returning to Thailand, Dr. Piyasvasti became a career civil servant with the Thai government, starting at the National Economic and Social Development Board (NESDB) in 1980 working on macro-economic policy rising to become Director of the Economic Analysis Division.

He was instrumental in the establishment of the National Energy Policy Office and became Secretary General in 1994. As the chief technocrat in the energy sector in Thailand, Dr. Piyasvasti was responsible for coordinating energy policy from a range of departments within a number of Ministries for approval by the National Energy Policy Council (NEPC), chaired by the Prime Minister. He is most noted for implementing private participation in electricity generation, through pilot projects commencing in 1992 and initiating a successful and credible Independent Power Producer (IPP) program in 1996. The procedures he implemented are still used for the ongoing Small Power Producer (SPP) and Very Small Power Producer (VSPP) programs. Dr. Piyasvasti also managed the process of deregulating the oil market in 1992 and establishing the structure of the gas supply industry in 1999.

On completion of his term as Secretary General, NEPC, Dr. Piyasvasti served as the Director General of the Public Relations Department, served a second term as Secretary General NEPC for little over a year and then was appointed Deputy Permanent Secretary of the Prime Minister’s Office. He resigned from the civil service in February 2003 to become the Chairman of Kasikorn Asset Management Company. Most controversially perhaps, he was appointed Minister of Energy in the Surayud coup Government in October 2006.

In addition to his official posts, Dr. Piyasvasti served on a number of Boards of State Enterprises and as a member of a number of government committees. Key appointments include the Boards of Bangchak Petroleum, Mass Communications Authority of Thailand (MCOT) and the Metropolitan Rapid Transit Authority (MRTA) and membership of the Bank of Thailand’s Monetary Policy Committee and the Ministry of Finance’s State Enterprises Performance Evaluation Committee where he was responsible for the evaluation of seven state enterprises including water, transport and telecommunication utilities and banks.

Relationship with Thai Airways, and the job ahead…

Dr. Piyasvasti’s first official interaction with Thai Airways International was his appointment to the Thai Airways Privatisation Committee in 1998. This Committee, established under the Act on Private Participation in State Undertakings (1996) was responsible for the preparation of the Secondary Public Offering of THAI shares. The transaction was completed under the First Thaksin Government.

Thai Airways is supervised by the Ministry of Transport, the Minister of which, Mr. Sophon Saram, is a member of the party which is a junior coalition partner to the current Democrat led government. The shares in THAI are owned on behalf of the government by the Ministry of Finance, the Minister of which, Mr. Korn Chatikavanij, is a close confidante of the Prime Minister, Mr. Abhisit Vejjajiva.

On the commencement of his position as President of THAI, Dr. Piyasvasti’s stated strategy for the airline was reported in the Thai press as focusing on increasing THAI’s competitiveness and revenue enhancement. It was reported that he would achieve this through addressing in-flight service as well as improving fuel risk management practices. He was recently reported in the English language press on 28 November 2009 as wanting to establish strategic relationships with other Thai owned airlines to challenge the entry of Air Asia in the market. It is known that he has retained LEK, a consultancy, to provide advice on reforms at THAI.

It is generally understood that Dr. Piyasvasti has the support of the Democrat Party which is the senior coalition partner. While his wife is a senior advisor to the Democrat Party, and Dr Piyasvasti served as Energy Minister in the coup government (the military being seen as sympathetic to the Democrats), his appointment is unlikely to be as politically partisan as it first appears. Though there was an alternative candidate promoted by the junior coalition party via the Minister of Transport, it does appear that that Dr. Piyasvasti’s track record, as well as his reputation as a one of Thailand’s foremost innovative policy makers, were the main reasons for his selection.

Reports from financial analysts point to the need for THAI to quickly implement a recovery plan. Further, commentators point to the need for restructuring at THAI to deal with the chronic problems typically found in government owned enterprises with huge political patronage. Such restructuring, including the separation and privatization of subsidiaries has long been opposed by the THAI labour association as well as the Ministry of Transport. The abandonment of the proposed strategic sale as part of the 1998 THAI privatization plan was partly in response to concerns that this would lead to further restructuring.

The political uncertainties means that it is unlikely that Dr. Piyasvasti would be able to initiate any large scale reform program. In the absence of this, the choices seem to be the sort of cost-cutting and revenue enhancements that have already been announced.

In this case, his strong relationships with key government decision makers and his long experience in dealing with political relationships would mean that the government would be likely to support Dr Piyasavati’s attempts for many of the modest reforms for THAI he has already flagged, which would be a huge achievement for a company which has become the epitome for a political and personal play-thing for politicians and other insiders.

A more radical Chairman than expected?

Despite Dr. Piyasvasti’s experience and credibility with financial matters, not implementing more serious structural reforms at THAI may continue to leave the airline exposed to the vagaries of the global airline industry. This reality may tempt Dr Piyasvasti to push further than expected.

Unusually among Thai bureaucrats he has an incredibly analytical approach to problem solving, while at the same time those who know him report him to possess a combative temperament who does not always suffer fools gladly. While he is unlikely to be a ‘crash or crash through’ Chairman, he may well be tempted to take on some of the more entrenched problems at Thai, including the widespread nepotism which has characterized, as well as held back the company for years.

The challenge for Dr Piyasvatsti then is how far he is willing to push the envelope in terms of change at the airline. Given his successful track record establishing the framework to make the Thai energy sector one of most liberal and well run in the country – via introducing private sector competition, as well as pushing through legislation for an independent economic regulator to oversee competition – he may find it hard to resist the temptation to initiate far reaching changes at THAI.

Dr Piyasvatsti has a particularly difficult task as President of THAI. Outsiders appointed to the position of President have traditionally not lasted long. His opponents within the company, while giving him grudging respect for his previous accomplishments and his intelligence, also fear that he will be successful in breaking the nexus of nepotism and underperformance at the company. These opponents will undoubtedly try to find ways to publically and privately undermine him.

Many analysts and insiders hope though that Dr Piyasvatsti does live up to expectations. Those who know both the airline and Dr Piyasvatsti fear that if he is not successful, THAI will have lost its best chance in many years to turn the company around.

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