THAILAND-Thai Smile, a ‘light premium’ sub-brand of Thai Airways International, due to fly July, next year, has tweaked its strategy to emphasise mainly regional links, while reducing its domestic operations to just 20% of system capacity, down from an earlier 50%.
The airline will start with regional routes and develop a trimmed domestic network later, officials reported Tuesday.
Thai Smile managing director, Woranate Laprabang, said: “We have decided to go for regional routes first and leave domestic services to five cities – Ubon Ratchathani, Udon Thani, Khon Kaen, Chiang Rai and Surat Thani that were announced to start next year to on hold.”
He confirmed one consideration was THAI’s 49% financial stake (increased from 39% in October) in Nok Air, which concentrates solely on domestic routes from its Don Mueang Airport base.
“It will prevent market confusion and we think THAI and Nok Air can cover domestic services well enough,” he said.
Previously the ratio between domestic and regional routes had been set at 50:50, but in the new strategy, domestic routes will figure at around 15% to 20%.
No details were available on regional destinations.
“We are awaiting approval on exact routes. “It is uncertain at the moment. We previously made announcement then things changed so by late January, we should be able to name the destinations,” said Mr Woranate.
Thai Smile’s regional destinations are likely to include cities in China, India and ASEAN within a four-hour flight range. It will replace THAI on some of the routes that have not been profitable for the full-service airline.
Five destinations are planned in 2012 as aircraft roll out.
“The airline is part of our strategy to exploit ASEAN open skies in 2015. We have to lay the foundation and head off competition… like Malaysia’s low cost franchisee which co-invests in several countries.”
Thai Smile has already got Cabinet approval to order 11 Airbus A320, which will roll out from June next year until 2015.
But to catch up with growing competition, Thai Smile needs more aircraft to operate in the business model efficiently. Mr Woranate said subject to approval, the company would obtain additional aircraft during 2013 and 2014 because during those two years, Thai Smile would be limited to just two new aircraft joining the fleet annually.
According to the delivery plan, the first A320 aircraft will arrive in June; the second and third in August and the fourth in September. In 2013 and 2014, two aircraft will join the fleet each year and the last three are due in 2015.
This will limit the airline’s ability to add destinations quickly in the initial three years and is reflected in a low estimate of just 300,000 passengers a year in 2012. But by 2013 the airline claims it could carry 1 million passengers earning Bt5 billion revenue.
“Our expectations are to stop the drain in market share for THAI by competing head-on with its rivals. Regionally, THAI has 29% market share now… the objective is to stop the erosion in market share.”
Reservations for Thai Smile flights will be open from April, about three month prior to the launch, through all THAI’s distribution channels. The fares will float between full-service and low-cost airline offers.
Thai Smile is recruiting cabin crew and pilots as well as finding a designer for its uniform due to be unveiled in March.
Thai Smile is a business unit of Thai Airways International and will operate under the TG code. The service model is light premium, rather than low-cost. Passengers will still get a snack, free baggage allowance, free seat selection and mileage accrual.
The airline will start with regional routes and develop a trimmed domestic network later, officials reported Tuesday.
Thai Smile managing director, Woranate Laprabang, said: “We have decided to go for regional routes first and leave domestic services to five cities – Ubon Ratchathani, Udon Thani, Khon Kaen, Chiang Rai and Surat Thani that were announced to start next year to on hold.”
He confirmed one consideration was THAI’s 49% financial stake (increased from 39% in October) in Nok Air, which concentrates solely on domestic routes from its Don Mueang Airport base.
“It will prevent market confusion and we think THAI and Nok Air can cover domestic services well enough,” he said.
Previously the ratio between domestic and regional routes had been set at 50:50, but in the new strategy, domestic routes will figure at around 15% to 20%.
No details were available on regional destinations.
“We are awaiting approval on exact routes. “It is uncertain at the moment. We previously made announcement then things changed so by late January, we should be able to name the destinations,” said Mr Woranate.
Thai Smile’s regional destinations are likely to include cities in China, India and ASEAN within a four-hour flight range. It will replace THAI on some of the routes that have not been profitable for the full-service airline.
Five destinations are planned in 2012 as aircraft roll out.
“The airline is part of our strategy to exploit ASEAN open skies in 2015. We have to lay the foundation and head off competition… like Malaysia’s low cost franchisee which co-invests in several countries.”
Thai Smile has already got Cabinet approval to order 11 Airbus A320, which will roll out from June next year until 2015.
But to catch up with growing competition, Thai Smile needs more aircraft to operate in the business model efficiently. Mr Woranate said subject to approval, the company would obtain additional aircraft during 2013 and 2014 because during those two years, Thai Smile would be limited to just two new aircraft joining the fleet annually.
According to the delivery plan, the first A320 aircraft will arrive in June; the second and third in August and the fourth in September. In 2013 and 2014, two aircraft will join the fleet each year and the last three are due in 2015.
This will limit the airline’s ability to add destinations quickly in the initial three years and is reflected in a low estimate of just 300,000 passengers a year in 2012. But by 2013 the airline claims it could carry 1 million passengers earning Bt5 billion revenue.
“Our expectations are to stop the drain in market share for THAI by competing head-on with its rivals. Regionally, THAI has 29% market share now… the objective is to stop the erosion in market share.”
Reservations for Thai Smile flights will be open from April, about three month prior to the launch, through all THAI’s distribution channels. The fares will float between full-service and low-cost airline offers.
Thai Smile is recruiting cabin crew and pilots as well as finding a designer for its uniform due to be unveiled in March.
Thai Smile is a business unit of Thai Airways International and will operate under the TG code. The service model is light premium, rather than low-cost. Passengers will still get a snack, free baggage allowance, free seat selection and mileage accrual.
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