THAI hopes its sister airline will pull it out of losses

Corporate December 02, 2013 00:00

By Bamrung Amnatcharoenrit
The N

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Thai Airways International (THAI) is pinning its hopes on THAI Smile - its sister airline that offers light premium service - in a move to boost its performance at a time when it is suffering from fierce competition and big losses.

The sister airline has been spun off as an independent company under the name Thai Smile Airways Co. From February, it will go into high gear to capture a big share of both the domestic and regional markets. 
It will receive an air operator’s certificate (AOC) in the next two months and its code will most probably be “SM”. Woranate Laprabang is overseeing the operation as acting managing director. 
The national carrier is hoping that THAI Smile will help ease its swelling costs and bad business performance. THAI and its subsidiaries reported a net loss of Bt6.313 billion in the first nine months of this year. 
Chokchai Panyayong, THAI’s senior executive vice president, said THAI Smile was in the process of separating from THAI, which holds a 100-per-cent stake. The carrier is run as a cost-centric scheme so as to make it more competitive. 
Its management structure will be more flexible, especially when it comes to hiring staff. Operations that are not a  part of its direct focus will be outsourced. However, in legal terms, the company will remain a state enterprise and its chief will be selected according to company law, which sets the selection procedure to be completed within a year. 
At present, the parent company is defining a group strategy for THAI Smile to follow. THAI will not set aggressive growth strategies, but will focus more on maintaining stability. However, it does expect to grow fast with THAI Smile, as its key target will be the mass market. 
The main focus will be the domestic market and the airline has earmarked its Airbus A320-200 aircraft for short-haul flights. However, it might pick its wide-bodied aircraft like Boeing 777 for medium-range flights to countries like Japan and South Korea that take about five or six hours. This will be the second step of its business plan. 
Chokchai said the Japan and South Korea route had room for growth, especially driven by travellers looking for prices between low-cost and full-service carriers. This group wants more onboard service and other options at a reasonable price. 
THAI Smile’s current domestic schedule covers Chiang Mai, Surat Thani, Phuket, Krabi, Udon Thani, Ubon Ratchathani and Hat Yai from Suvarnabhumi Airport. It also flies the Chiang Mai-Phuket route. Its overseas destinations from Bangkok’s Suvarnabhumi include Macau, Ahmedabad, Colombo, Chongqing and Changsha. 
From December 15, it will add four flights a week to Luang Prabang, making it its fifth overseas destination. 
Woranate said 40 per cent of its passengers to Luang Prabang would come from THAI, especially the transit passengers from Europe. At present, there are only two airlines that fly to Luang Prabang – Bangkok Airways and Lao Airlines. 
As for regional expansion, the firm will reconsider its plans to open new routes in India, due to the depreciation of the rupee. 
THAI Smile, so far, has nine aircraft in its fleet with a 10th to be added next month. The number of aircraft is set to rise to 17 next year. 

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