September 25, 2013 00:00 By Nongnapas Maipanit
The Cabinet yesterday approved the establishment of THAI Smile Airways, which until now has been a unit of Thai Airways International, as a wholly owned subsidiary of THAI, said Transport Minister Chadchart Sittipunt.
The cost of setting up the subsidiary company is Bt1.8 billion.
Prime Minister Yingluck Shinawatra said during the Cabinet meeting that THAI and THAI Smile had to tap separate market segments and to have separate operating accounts – THAI Smile’s costs could not be laid on THAI. THAI Smile also has to be able to compete with other low-cost rivals.
Chadchart said THAI Smile had to make clear determinations of its per-kilometre operational costs, cabin factors and market segments.
THAI can immediately set up the THAI Smile company now that it has Cabinet approval.
A ministry source said THAI Smile would operate both domestic and international routes not exceeding four hours’ flying time. These could include Asean countries, China and India. It will be positioned as a regional airline with the same service quality as THAI.
Thirty per cent of its customers will be those connecting with THAI flights, and the rest will remain within the THAI Smile destination network. Its economy-class airfare for international routes will be 20 per cent lower than those of THAI. The economy fare for domestic routes will be the same as THAI’s.
THAI Smile will recruit some employees from THAI and outsource some work to others. Initially it will have 537 staff before rising to 892 in 2017.
It will utilise 20 Airbus A320-200s leased from THAI. Of that total, four were delivered last year while THAI Smile was still operating as a THAI unit. Six planes will be delivered this year, another seven next year, and the last three in 2015.